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

Berkshire Hathaway exited its remaining Amazon position by March 31, after cutting holdings from 10 million shares to under 2.3 million at year-end, and initiated a new Macy's stake of nearly 1.7 million shares valued at $30.1 million. The move signals a portfolio rotation from a high-multiple growth name to a lower-valuation retailer with improving same-store sales, up 2% in fiscal Q4. Amazon remains up 14.4% year to date through May 14, while Macy's shares are down 16.5% this year and trade at a P/E of 8 versus 13 previously.

Analysis

The portfolio shift reads less like a view on Amazon’s business and more like a capital-allocation signal: Berkshire is rotating out of a high-quality compounder with increasingly fully reflected fundamentals into a low-multiple, mean-reversion setup where the market is pricing in structural decline. That creates a short-term sentiment asymmetry for M, because a Berkshire entry can attract incremental value screens and retail attention, even if the position size is too small to imply conviction. In contrast, AMZN exiting removes a marginally important long-duration buyer from the shareholder base, but the business impact is limited unless this becomes the first step in a broader de-risking of retail/consumer exposure.

The real second-order effect is on the market’s interpretation of cyclicals versus defensives. If Macy’s can sustain even modest comp momentum while trading at single-digit earnings multiples, the stock becomes a levered bet on stable-to-improving discretionary demand and cleaner inventory execution; the upside is multiple expansion, not earnings growth. The risk is that the balance sheet and traffic sensitivity can turn a cheap equity into a value trap quickly if gas prices, promotions, or an earnings reset compress margins over the next 1-2 quarters.

For Amazon, the near-term setup is more about opportunity cost than fundamentals: a 32x multiple with ongoing reinvestment means the stock likely needs another leg of margin preservation or accelerating AWS/ads growth to outperform from here. Without that, it becomes a crowded quality-tilt name that can underperform on any rotation toward cheaper cash-flow stories. The contrarian miss is that Berkshire’s move may be less bearish on AMZN and more indicative of a preference for simpler, catalyst-rich capital return stories in a late-cycle market.

Key Decisions for Investors

• Initiate a tactical long in M over the next 1-3 weeks, targeting a 3-6 month mean-reversion trade; use the sub-10x earnings multiple as the anchor and trim if the stock re-rates to 11-12x without a corresponding earnings revision.
• Consider a pair trade: long M / short AMZN for 3-6 months if consumer spending data stays stable; the thesis is valuation convergence, with M needing only modest execution while AMZN needs another growth acceleration leg to justify further upside.
• Add AMZN only on pullbacks or if near-term operating data confirms continued reinvestment payoff; risk/reward is less attractive at current multiples unless AWS, ads, or margin expansion surprise higher over the next 2 quarters.
• Use options on M rather than common if available: buy 3-6 month calls or call spreads to capture re-rating upside while defining downside if traffic deteriorates and the thesis breaks.
• Set a stop/review trigger on M around the next earnings cycle: if same-store sales decelerate or inventory/promotional pressure reappears, the low multiple can compress further and the trade should be exited quickly.