With stock valuations soaring, 2025 has been a somewhat quiet year for Warren Buffett and Berkshire Hathaway. Despite sitting on a record hoard of cash that exceeds $340 billion, Buffett and his team haven’t been finding many opportunities to deploy massive amounts of capital into deeply undervalued stocks. With that said, Berkshire has made several smaller moves this year. What stocks is Buffett buying, and what might retail investors be able to learn from the Oracle of Omaha’s moves in a difficult market for value investors?
UnitedHealth
One of the largest moves Berkshire Hathaway has made this year has been the purchase of a little over 5 million shares of embattled insurer UnitedHealth (NYSE:UNH) is Q2. The stake, today worth about $1.8 billion, has so far not delivered positive returns for Berkshire. This position, however, likely reflects Buffett’s belief in the long-term strength of the business.
Owing to recent weakness in its performance and widespread criticism of its vertically integrated business model, UNH currently trades at a modest valuation of 18.5 times earnings and 0.8 times sales. Even so, UnitedHealth remains the largest health insurance business in the United States, giving it the kind of competitive moat that Buffett tends to look for. Business headwinds also haven’t stopped UnitedHealth from remaining generally profitable, as the business has been able to deliver a 4.2 percent net margin, a 10.0 percent return on invested capital and a 21.4 percent return on equity over the last 12 months.
Constellation Brands
Alcoholic beverage major Constellation Brands (NYSE:STZ) first appeared in the Berkshire Hathaway portfolio in Q4 of last year and has since been added to in each successive quarter, creating a $1.8 billion position. As with UNH, Berkshire is still down on its holdings in STZ due to the ongoing weakness of the alcoholic beverage market. This weakness is attributable to both pressure on consumer discretionary spending and shifting health perceptions around alcohol consumption.
Cumulatively, these negative trends could have left STZ undervalued at today’s prices. With a trailing 12-month loss of almost 45 percent, Constellation Brands now trades at only 19.1 times earnings and 2.4 times sales. Buffett isn’t the only one seeing value in Constellation, as the average analyst price target of $172.61 implies an upside of over 30 percent from the most recent price of $130.98.
Constellation brands could also emerge from the beer, wine and liquor industry’s current downturn as a significant winner. The business owns both Modelo and Corona, increasingly popular beer brands that have managed to maintain their popularity among younger drinkers. Unless the historically resilient alcohol industry really does experience a lasting decline, Constellation Brands could be primed for a strong comeback when beverage sales rebound.
Pool Corp.
Since Q3 of last year, Berkshire Hathaway has been consistently buying up shares of Pool Corp. (NASDAQ:POOL). Unlike some of the other stocks that Buffett has been focusing on, Pool isn’t trading at noticeably low value multiples. Indeed, POOL’s current P/E is 25.9, accompanied by a price-to-book ratio of 8.2.
While Pool Corp. may not be massively undervalued, the business does appear to have a strong moat that could set it up for long-term growth and market dominance. Pool Corp. is vertically integrated and exercises what nearly amounts to a monopoly over the niche pool products market. This moat also translates to substantial pricing power, as homeowners, hotels and apartment complexes with pools have to maintain them with products mostly sold by Pool Corp. in order for them to remain useful.
A final point in Pool Corp. is the fact that management has shown a strong preference for returning the cash generated by the business to shareholders. POOL shares yield 1.7 percent in dividends, paying out $1.25 each quarter. Earlier this year, management also increased its buyback authorization to $600 million, a sizeable sum considering that Pool Corp. still has a market cap of under $11 billion.
Lennar
Homebuilder and real estate development business Lennar (NYSE:LEN) has also been on Berkshire’s radar recently. Buffett’s conglomerate took a roughly $800 million position in Lennar in Q2, accompanied by a much smaller stake in rival homebuilder DR Horton. Somewhat like the Constellation Brands stake, this investment in large homebuilders seems to be a play on strong businesses in a temporarily depressed industry that could post significant gains in a future recovery.
At 12.3 times earnings and 0.9 times sales, Lennar’s valuation is understandably attractive. It’s worth noting, however, that Lennar has experienced two quarters of falling revenues and four of falling earnings due to a softening home market. While the business has still been able to stay profitable with a trailing 12-month net margin of 7.7 percent, Lennar may not be able to mount a substantial recovery until the housing market regains steam and interest rates come down.
Chevron
Though Buffett’s buying of oil stocks has cooled a bit this year, he did add about 2.9 percent to his stake in Chevron (NYSE:CVX) in Q2. That stake, now worth almost $19 billion, has been built up over many years and accounts for almost 7 percent of the total Berkshire Hathaway portfolio.
Like the large stake in Occidental Petroleum (NYSE:OXY), the Chevron stake appears to be a long-term bet on continued energy sector strength. Although green energy solutions are attracting more investor attention at the moment, demand for oil and gasoline is likely to remain high for many years to come. Chevron’s annualized dividend payout of $6.84 per share is also an attractive cash generator for Berkshire. With about 122 million shares in Berkshire’s portfolio at the moment, Chevron produces over $800 million in annual dividends.
Berkshire’s Japanese Trading House Investments
A final interesting item of note is Berkshire’s ongoing investment in a group of five Japanese trading houses that Buffett first started buying in 2019. This year, though, Berkshire has received permission from the trading houses’ management teams to boost its investment. The result has been a steady buildup of shares over the past couple of reported quarters. The largest target of this buying effort among the houses appears to be Mitsui, to which Buffett has added about 6.6 million shares. This brings Berkshire’s stake in Mitsui to over 10 percent.
Though the Japanese investment may not be quite as relevant to American retail investors, it does show that Buffett is looking for value abroad and may be finding it in Japan. Given his historical preference for American stocks, this may be a rare indication that the Oracle of Omaha is searching international markets for alternatives to the high valuations that currently define the US market.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.