Warren Buffett's Successor, Greg Abel, Dumped Amazon and Bought 3 Million Shares of This Undervalued Stock

Berkshire Hathaway sold its Amazon stake and bought about 3 million shares of Macy's, a small, contrarian position that appears tied to valuation and real estate value rather than a high-conviction growth bet. Macy's Q1 fiscal 2026 net sales rose 1.8% year over year to $4.7 billion, comparable sales increased 3%, adjusted EPS climbed 18% to $0.13, and full-year guidance was raised. The article frames Macy's as improving but still risky, so the news is more relevant as portfolio positioning commentary than as a major market catalyst.

Analysis

The market read-through is less about Berkshire’s retail conviction and more about capital allocation signaling: the portfolio is still being de-risked toward cash-generative, defensible compounders while smaller legacy positions are being recycled into optionality. That makes AMZN less interesting as a standalone bearish signal and more of a housekeeping item; the second-order effect is that investors may over-interpret a disposition that was likely driven by position granularity and manager turnover rather than a fundamental call on e-commerce or cloud.

M is the more consequential signal because it creates a low-expectations setup where even modest operational improvement can re-rate the equity. The stock’s cheap multiple is only meaningful if the company can sustain positive comp trends long enough to convert real estate monetization into durable FCF rather than a one-time balance-sheet event; if that happens, the market can start valuing the asset base separately from the retail business within 6-18 months. The biggest hidden variable is credit: cleaner operating results can tighten refinancing terms and lower the equity risk premium faster than earnings alone would imply.

The contrarian miss is that consensus still treats department-store recovery as linear when it is usually binary: either inventory discipline, store closures, and asset sales buy enough time for margin stabilization, or the business slips back into a slow decline. For M, the upside case is not “great retailer” but “better-than-zero liquidation/monetization value plus some operating earnings,” which can justify a much higher share price than the market currently assigns. For AMZN, the risk is not near-term earnings but narrative drift—if investors start using Berkshire’s sale as a governance/portfolio-construction proxy, sentiment can lag fundamentals for a few quarters even without any deterioration in the business.

Key Decisions for Investors

• Long M on a 3-6 month horizon: favor a starter position on pullbacks with a target of 20-30% upside if comp trends and guidance revisions persist; use a hard stop if sales momentum rolls over for two consecutive quarters.
• Pair trade: long M / short consumer discretionary retail basket (XRT or a weak dept-store peer) for a 6-9 month mean-reversion thesis; the catalyst is asset-value realization versus the market’s blanket skepticism on legacy retail.
• Avoid reading BRK.B’s AMZN sale as a short signal; if holding AMZN exposure, keep it as a core long and use any post-filings weakness to add over 1-3 weeks, since the sale is more flow-driven than thesis-driven.
• For event-driven investors, consider a bullish call spread in M expiring in 6-9 months to capture rerating from guidance/asset-monetization progress while limiting downside if turnaround execution stalls.
• Watch JPM as the likely beneficiary of portfolio-manager migration and capital allocation discipline at Berkshire; on any market-wide financials rotation, JPM remains the cleaner quality compounder versus speculative cyclical retailers.