Cash Reserves Approaching $2,000 Billion! What does Burkhill want? （2024.05.29）

Hello everyone, this week's Tech Tracking analyzes the investment holding company under the banner of “stock god” Buffett - Burkhill Hasawi$Berkshire Hathaway-A(BRK.A.US)$。 Interested friends can also joinFutubull Official Exchange Group, get timely access to the latest investment courses and exchange investment ideas and methods with more professional cattle friends in real time.

Hot Spot Events

According to Berkshire's latest quarterly report, the company's cash reserves have broken an all-time high and are still growing. This seems to indicate that Buffett is currently having a hard time finding a value investment in the market that matches his taste.

Data showed that as of the end of the first quarter of this year, Burkhill's cash reserves (including cash and cash equivalents, short-term Treasury bonds) reached $1890 billion, an increase of 13% compared to the end of 2023.

What is the concept of a cash reserve of 1890 billion dollars? For the record, entertainment giant Disney and catering giant McDonald's have a current market capitalization of $1840 billion and $1800 billion, respectively. That is, Buffett can pretty much buy any of the two giants directly with cash.

When asked why huge cash reserves are not being used, Buffett cautiously says that only when their team thinks the investment risk is small and the potential returns are high. In other words, for Buffet, which adheres to the value investing concept, today's large-scale investments are not cost-effective.

In addition, the data showed that Berkshire's shareholders' equity totaled more than $5711 billion, ranking first among all U.S. publicly traded companies and nearly twice that of second-ranked JPMorgan Chase. This is another amazing data and achievement, because in 1965, Burkhill's shareholders' equity was still less than $5 million when Buffett was just taking over Berkshire. In 60 years, it has multiplied more than 1 million times!

Burkhill's share price has bounced back over the past two months, along with the company's continued rise in book value, making its stock look more attractive, according to Barron's Weekly.

Book value has historically been a key indicator of Berkshire valuation. According to Barron's Weekly, Berkshire's net market rate (P/B) has fallen to 1.5 times its current market value from 1.6 times in February (when the stock price was at its peak) at the end of the second quarter. Over the past five years, Berkshire's P/B valuation has averaged around 1.4 times.

Technical analysis

Trend analysis:

Starting in late October 2023, Berkshire's Class A (BRK.A) shares began a strong rally, rising as high as 28% and hitting an all-time high of $64.7 million at the end of February, just in time for the company to release the 2023 Quarterly Report. Since then, Berkshire shares have been in a crosscutting stance, running in the middle of a slightly downward channel.

Indicator Interpretation:

For the past two months, Berkshire's share price has oscillated up and down near the 50-day average (MA50), suggesting that the market is hesitant and the short-term direction is unclear. At the same time, some commonly used momentum swing indicators, such as the MACD and RSI, are bearish, which is consistent with price movements and there are no visible anomalies.

What is suspicious is that since the share price hit an all-time high in February, trading volume has seen a marked increase, with daily trading volume roughly 1.5 times what it was before. In general, share prices tend to shrink during the settlement period.

Direction of attention:

For the past 3 months, Berkshire's share price has continued to run in the channel, providing potential band trading opportunities for short-line investors.

In addition to watching share price movements within the channel, investors can also focus on the $60,000 close and the 50-day average (MA50), both of which are more likely to serve as key support or resistance levels.

This content discusses technical analysis, and other approaches, including fundamental analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect the expected results.

All investments involve risk, including the potential loss of principal, which cannot guarantee the success of any investment strategy.