Berkshire Hathaway (BRK.B) - The Value Titan

A Buffett-Backed Buy on the 200-Day Pullback

“Be fearful when others are greedy and greedy when others are fearful.”
—Warren Buffett

Thesis in One Sentence: BRK.B has retraced to its 200-day SMA (~$482–$485) on oversold momentum, while underlying cash flow and book value growth remain rock-solid—presenting a low‐risk, high‐reward swing entry as Buffett’s conglomerate absorbs market jitters. See why and how..

1. Fundamentals Remain Steady

• Operating Cash Flow (TTM): $30.6 B

• Share Repurchases (2024): $2.9 B

• Net Debt/EBITDA: ~0.1× (effectively net-cash positive)

• Price to Earnings ratio: ~13

• Price to Book ratio: ~1.6

• EPS (GAAP, TTM): $41.27 per share

2. Technical Setup: Relief-Bounce on the 200-Day

Pullback & Support

• June low tested the 200-day SMA at $482–$485 and the lower Bollinger Band ($478) before reversing.

Momentum

• RSI (14) bottomed at 37 (mild oversold) and has climbed into neutral territory.

• MACD histogram is crossing above zero on the daily, hinting at a short-term trend flip.

Moving Averages

• Price is now challenging the 20-day SMA (~$492).

• The 50/100/200-day SMAs converge in the $493–$506 band, a zone that will signal bullish commitment if cleared with conviction.

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3. Valuation & Price Targets

• Entry Zone: $490–$492 on a daily close above the 20-day SMA (low-risk zone just above the 200-day SMA)

• Stop-Loss:

  • Primary: $485 (just under the 200-day SMA)

  • Hard: $482 (break below 200-day SMA invalidates the setup)

• Target 1: $517 (0.382 Fib, ≈ +5% from entry) → light profit-taking (50% of position)

• Target 2: $528 (0.618 Fib, ≈ +8% from entry) → sell a second tranche (25% of position)

• Target 3: $533 (0.786 Fib, ≈ +10% from entry) → exit remainder with a trailing stop

Stretch: If $533 clears on strong volume, look to Fibonacci extension levels at $546 (1.0), $573 (1.618), and beyond.

4. What We’re Doing

1. Sizing: Risk 1% of portfolio per trade.

2. Entry: Enter half at $490–$492; scale into full size on a daily close >$492.

3. Stops & Management:

   • Initial stop at $485; tighten to breakeven ($492) once $517 is reached.

   • Trail stops using the 10-day low or the 20-day SMA, whichever is higher.

4. Exits: Take profits in three tranches at $517, $528, and $533; consider adding if price clears $546 on robust volume.

Final Thoughts

BRK.B’s pullback to the 200-day SMA aligns perfectly with Buffett’s “buy when others are fearful” dictum. With solid earnings, ample cash, and a below‐average valuation, this setup offers an asymmetric risk/reward: limited downside into a proven support zone, versus multi‐week upside to the $517–$533 range.

Steady compounding wins.