Berkshire Hathaway Just Dumped a Beloved Stock. Here's What It's Buying Instead.

Berkshire Hathaway exited its remaining Amazon position, selling down from 10 million shares in September 2025 to zero by March 31, while initiating a new Macy's stake of nearly 1.7 million shares worth $30.1 million. The move highlights a portfolio rotation toward a deeply discounted retailer with Macy's P/E falling from 13 to 8, versus Amazon trading at about 32x earnings. The article is primarily a portfolio update on Berkshire's holdings and is unlikely to have broad market impact.

Analysis

Berkshire’s sell-down of a scaled, liquid mega-cap name in favor of a deeply discounted retailer reads less like a simple valuation call and more like a signal that capital is rotating toward assets where incremental execution can re-rate the equity faster than the market expects. The second-order implication is that “durable growth at a fair price” is being de-emphasized in favor of “self-help plus multiple expansion,” which tends to work best when consensus remains skeptical and ownership is light. That dynamic is more supportive for the smaller market-cap candidate than for the larger compounder, because the former can move materially on any modest operational improvement.

For AMZN, the near-term risk is not business deterioration but expectation saturation: when a franchise already trades at a market multiple, any slowdown in margin expansion or capex payback can compress the multiple even if revenue keeps growing. In contrast, M’s setup is asymmetric because the stock’s downside is increasingly tied to macro consumer stress, while upside depends on management simply proving that traffic and mix are not permanently impaired. If higher-income focus continues to lift average ticket and reduce promotional intensity, operating leverage can surprise positively over the next 2-3 quarters.

The key contrarian read is that this is not a blanket endorsement of retail; it is a bet that the market is underpricing survivability and asset optionality. If consumption holds and gasoline-led pressure on lower-income spending is less severe than feared, the stock can rerate quickly from a low single-digit earnings multiple. But if the consumer weakens, M becomes a value trap because earnings revisions will outrun the cheap valuation anchor.

This is also a sentiment signal: when a marquee allocator rotates into an unloved retailer, it can attract incremental factor flows into “turnaround/value” baskets, especially if the stock already screens cheap on earnings. That can create a reflexive move over weeks, not years, as short interest and underownership amplify each positive data point. The trade is therefore more about catalyst timing than long-run franchise quality.

Key Decisions for Investors

• Long M on a 1-3 month horizon with a strict catalyst stop: target 15-20% upside if same-store sales hold positive and gross margin/mix improves; exit if next two prints show deceleration or promotional intensity rises.
• Short AMZN vs long M as a relative-value pair for 6-12 weeks: thesis is multiple compression risk in the higher-multiple compounder versus re-rating optionality in the cheap turnaround; size modestly because AMZN remains fundamentally stronger.
• Buy M call spreads into the next earnings window: upside is convex if management confirms higher-income customer traction; define risk to premium paid and avoid outright equity exposure if macro volatility is elevated.
• Avoid chasing AMZN despite solid fundamentals: at a market-level multiple, the risk/reward is less attractive than it looks, and any capex or margin hiccup could de-rate the stock by 10-15% without a change in the top-line story.
• Use BRK.B as a sentiment confirmation signal rather than a direct trade: if additional retail or value-oriented purchases appear in the next filings, increase conviction on the M long; if not, treat this as a one-off opportunistic allocation.