How Likely Is It That Warren Buffett's Successor, Greg Abel, Will Use a Portion of Berkshire Hathaway's $359 Billion Cash Pile to Buy This Large-Cap Value Stock in September?

Berkshire Hathaway reportedly increased equity purchases in Q2, spending $20B, but the article argues it is unlikely to add Walt Disney given a key risk mix. Disney trades at a low 14.3x forward P/E vs 21x for the S&P 500 and benefits from an “impossible to replicate” IP moat, with adjusted EPS up 19% in fiscal 2025 and expected to rise by double digits in fiscal 2026. However, legacy linear-TV declines and intense streaming competition (Disney+ and Hulu at 190M+ subscribers but pressured by secular shifts) make the earnings trajectory harder to underwrite, supporting a cautious view rather than an imminent buy.

Analysis

The market should not over-interpret Berkshire’s apparent pass on DIS: for a company that can buy almost anything, declining interest is more a signal of business quality than valuation. The real issue is not the headline multiple; it’s that DIS still has two earnings pools moving in opposite directions, and the shrinking one has a way of masking what the surviving businesses are really worth. That makes the stock mechanically cheap on forward earnings but not necessarily cheap on sustainable free cash flow, which is what a long-only allocator like Berkshire would care about.

For competitors, the implication is mixed. NFLX may see some relative support if investors conclude streaming consolidation is still a winner-take-most game, but the article also reinforces that growth is slowing at the category leader, which caps the multiple. GOOGL is the cleaner beneficiary of any Berkshire-style capital allocation lens: simpler cash generation, less legacy drag, and more optionality around AI monetization. If investors are looking for “quality at a reasonable price,” DIS is vulnerable to being bypassed in favor of names where the terminal margin structure is easier to model.

Near term, this is a sentiment event, not a fundamental catalyst, so the first move can fade. The real test is over 1-3 quarters: if DIS cannot show DTC profitability expanding fast enough to offset linear-TV erosion, the low multiple is justified and could compress further. Conversely, a stabilization in cable declines plus continued park resilience would falsify the bear case and make the stock look more like a value compounder than a value trap.

Key Decisions for Investors

• Do not buy DIS on Berkshire speculation; wait for the next earnings print to confirm whether DTC margin improvement is actually offsetting cable erosion. Falsifier: sustained operating income inflection in streaming over the next 1-2 quarters.
• Pair trade: long GOOGL / short DIS for 3-6 months. Thesis: GOOGL has cleaner cash-flow durability and better capital-allocation optionality, while DIS remains exposed to secular EBITDA leakage in legacy TV.
• If DIS rallies 5-8% on rumor-driven buying, consider selling out-of-the-money 2-4 month calls against any long exposure; the upside is likely to be capped until fundamentals prove out.
• Watch NFLX on pullbacks rather than chasing it here; if streaming multiples compress further, NFLX is likely to hold up better than DIS because it owns the category narrative even as growth slows.
• Set an alert on DIS free-cash-flow guidance and linear-TV revenue decline rate; if either worsens at the next update, the low P/E should be treated as a trap rather than a margin of safety.