This Table Explains Exactly Why Warren Buffett and Berkshire Hathaway Have Struggled to Find Stocks to Buy and Where You Can Find Great Value Stocks Right Now

Berkshire Hathaway has $369 billion in cash, but large-cap stocks trade at premiums of 10%–19% to their 20-year historical P/E ratios, limiting attractive opportunities for CEO Greg Abel and investment manager Ted Weschler. By contrast, small- and mid-cap value stocks trade below historical valuations, with the article highlighting AVUV and DFAT as ETF options for investors seeking exposure. The commentary points to potential value in smaller companies but does not report a new market-moving event.

Analysis

The valuation table is a relative-valuation signal, not proof that small-cap value is cheap in absolute terms. Its key omission is composition: lower multiples may reflect weaker earnings durability, greater refinancing sensitivity, or sector exposure rather than a temporary pricing gap. A profitability screen helps, but does not eliminate those risks. The potential edge is capacity: smaller investors can access less-liquid names that are immaterial to Berkshire, though limited institutional ownership can also mean wider spreads and sharper drawdowns.

For the next 1–3 months, the thesis needs confirmation from earnings breadth and small-cap relative performance; the article supplies neither. Over 6–18 months, easing financing pressure and improving earnings participation could support a re-rating, while sticky rates or a downturn would likely expose balance-sheet and cyclicality risks first. Large-cap valuation premiums alone are not a near-term catalyst for convergence.

The article’s Berkshire framing is not a bearish signal for BRK.A: constrained deployment can coexist with valuable liquidity and disciplined avoidance of overpaying. Nor does a large-cap premium establish that GOOG is overvalued; company-level earnings, cash flow, and price are needed. Treat the ETF suggestions as exposure tools, not evidence of expected returns.

Key Decisions for Investors

• Watchlist / measured entry: build AVUV exposure in stages rather than buying the valuation spread all at once. Verify the underlying valuation methodology, sector weights, earnings revisions, and balance-sheet quality before sizing; the source table alone is insufficient.
• Relative-value idea for a diversified book: consider a small long AVUV versus short broad U.S. large-cap exposure, sized to limit unintended market beta. This is a multi-quarter convergence trade, not a catalyst-driven event trade; stop adding if small-cap earnings revisions deteriorate materially or financing stress rises.
• Use DFAT instead of AVUV when broader small- and mid-cap value exposure is desired, but compare holdings, turnover, liquidity, and sector concentration first. The article’s transaction-cost and tax-efficiency claims require verification and should not drive the investment case.
• Falsifiers / risk controls: reassess if rates remain restrictive, credit conditions tighten, or small-cap profitability and free-cash-flow trends weaken. No standalone trade in BRK.A or GOOG follows from this market-wide valuation argument.