CEO Watchlist: Week In Review

May 4, 2025

TOP NEWS AFFECTING THE STOCK MARKET THIS WEEK:

End Of An Era: Warren Buffett's Secret Is Out!!! (Source)

Stocks mentioned: $BRK.B

Yesterday, at Berkshire Hathaway's (BRK.B) annual shareholder meeting, Warren Buffett announced he will step down as Berkshire Hathaway's CEO at the end of 2025. He recommended Vice-Chairman Greg Abel as his successor, a move that surprised many at the annual shareholder meeting. Buffett praised Abel’s hands-on management and confirmed he won’t sell any of his Berkshire shares, expressing confidence that the company’s prospects will improve under Abel’s leadership. While Buffett will stay involved in an advisory capacity, final operational and capital decisions will shift to Abel, who pledged to maintain Buffett’s patient value investing approach.
What does this mean for Berkshire stock going forward? It's a little bit complicated. First, we have to think about the short-term vs. the long-term. Yesterday wasn't just an annual meeting, it was also where Berkshire reported their recent earnings, and it wasn't pretty. Net earnings fell 63% year over year (YoY) 😳🔴 It was down massively due to investment losses 🔴 Operating earnings dropped 14% YoY 🔴 with their insurance business being hit hard by losses due to California wildfires 🔴 Total revenue came in at $89.7B, nearly flat YoY 🟡 Despite a flat top line, equity portfolio losses totaled -$6.4B 🔴😳 which is a sharp reversal from +$1.9B gains in Q1 2024. In addition, “considerable uncertainty remains," Berkshire said in the filing, citing volatile macro and trade policy. It warned future results may be impacted across most businesses and equity holdings if conditions worsen. Judging based on this information alone, Berkshire seemed to have a pretty rough quarter and could cause some short-term volatility. With that being said, Berkshire has had a really good year so far, up almost 20% year to date, so they're doing something right.

When it comes to the long-term, we believe there are a lot of factors at play, specifically in relation to Buffett's successor Greg Abel. Greg has claimed he will continue to practice Warren Buffett's value-style of investing, but is that the right choice for a Berkshire Hathaway coming into the new age of AI? At the annual meeting yesterday, Berkshire called Al a "game changer" for insurance & risk decisions but says Berkshire hasn't made a "conscious, big-time effort" to adopt it yet. They're taking a wait-and-see approach for now, though they believe Al will ultimately drive major economic growth. This tells me they are not taking risk or trying to grow the company with AI. Berkshire currently sits on a record cash pile of $347 billion, so despite them not finding any stocks currently attractive for investments, then why aren't they deploying any of that capital towards efficency or growth within their own business by investing into AI infrastructure? This is an issue because at some point, the lack of spend on AI will eventually allow their competition to take the lead and with the amount of cash they have on hand, it shouldn't be an issue for them to invest a portion of it back into their own company. What we would like to see is for Greg to come in and begin to reinvest that cash pile into equities, but more importantly, into AI to take Berkshire from the 20th century into the 21st.

Tech Stocks Are At A Cross Road... (Source)

Stocks mentioned: $AAPL, $XYZ, $MSFT, $META, $NVDA

This earnings season is revealing how President Trump’s 145% tariffs are hitting tech companies unevenly. Consumer-focused giant, Apple (AAPL), reported a double beat on their earnings, but expects tariffs to increase its costs by $900 million this quarter alone, directly pressuring profit margins. CEO Tim Cook admitted it’s “very difficult” to predict tariff expenses beyond June, creating uncertainty for future financial planning. Despite shifting some production to India and Vietnam, Apple still relies heavily on China for manufacturing, leaving it exposed to further tariff risks, causing the stock to fall more than 3.7% on Friday. Apple is not the only one suffering from tariffs. Block (XYZ) reported a dismal quarter with a double miss, causing the stock to crash 20% on Friday! So although tech is the future, we are already seeing small and big tech stocks alike suffering because of this trade war.

This is why investors may want to be selective within tech. Most big tech names were actually able to report very strong earnings last week despite the tariff headwinds. Two such names were Microsoft (MSFT) and Meta Platforms (META). They both beat on the top and bottom line, which sent the stocks soaring after their reports. Not only was their revenue and earnings strong, but they even guided to spending more money on building out their AI infrastructure. Neither of these companies are backing down on their spend, which tells us they see a lot of growth over the next few years for their companies. One company this benefits in particular is Nvidia (NVDA). When these companies spend more, a majority of that money goes to Nvidia for their chips and infrastructure. We continue to like tech for the long-term, but we are definitely being picky in the names we own.

100 Days Of Trump: The Good, The Bad, And What's To Come... (Source)

Stocks mentioned: $SPY

Donald Trump has officially reached his first 100 days as President, during this term, and it's been a wild ride so far. In his first 100 days back in office, he has actively used executive orders to implement his policy agenda, including tariffs and changes to immigration enforcement. He has worked with Elon Musk on initiatives to reduce the size of the federal government by cutting departments and workforce. These actions have prompted both public demonstrations and debates for and against these policies and actions. The ones in favor of Trump's policies, believe that tariffs are necessary to strengthen the country and decrease reliance on other countries for manufacturing. The other side, against Trump's policies, claim the tariffs are only going to hurt international relations with our allies and put us in an economic recession. Whatever the case may be, let's take a look at how markets have reacted, and how we expect the markets to move going forward.

At the start of the year, markets rallied on optimism over Trump’s presidency. That changed when he introduced tariffs, which expanded beyond Canada and Mexico to nearly every major country, triggering a bear market. No trade deals have been finalized yet, but the market has been rebounding thanks to strong tech earnings and hints at future agreements. We believe stocks can hit new highs if either: a major trade deal is announced with a country such as India, South Korea, Canada, Mexico, the EU, etc. or if the U.S. and China agree to at least speak to each other about tariffs. Without progress, markets could turn lower. Currently, the S&P 500 (SPY) has risen for nine straight days, a streak not seen since 2004, and a breakout above 5,767 would make it difficult to remain bearish, while a rejection from that level could cause us to retest the lows from April. Right now, we are positioning ourselves cautiously by not being overly bullish or bearish in the current environment. We will continue to update our Investment Club members throughout the week based on breaking news related to the tariffs. Remember, these markets are very volatile and any piece of news could send the markets higher or lower, so we must always be ready to alter our investing strategy at any given moment.

INSIDER TRADES FROM THE WEEK:

1. Walgreens Boots Alliance (WBA) - Stefano Pessina, Executive Chairman, bought ~$9,000,000 worth of Walgreens Boots Alliance stock on April 27, 2025, but it was reported to the public on April 29, 2025. (Source)

2. Cracker Barrel (CRBL) - GMT Capital Corp., an institutional investor and 10% owner of the company, bought ~$16,000,000 of Cracker Barrel stock between April 4-30, 2025, but it was most recently reported to the public on May 1, 2025. (Source)

3. Tesla (TSLA) - Joseph Gebbia, Director, bought ~$1 million worth of Tesla stock on April 24, 2025, but it was reported to the public on April 28, 2025. (Source)