The ‘Oracle of Omaha’ is one of the most widely respected financial minds of all time — and investors don’t just take his advice to heart — they often take their cues from the moves that Warren Buffett makes.
Over the course of 2024, the billionaire has significantly reduced his holding in Apple (NASDAQ: AAPL) — soon after, the markets woke up to the fact that the company might be a bit overvalued going into the next quarter.
Likewise, Berkshire Hathaway (NYSE: BRK.A) slashed its holdings in Bank of America (NYSE: BAC) to less than 10%, raising alarms about the health of the U.S. banking system. Chinese automaker BYD (SHE: 002594) suffered the same fate.
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Unfortunately, unless you were holding those shares, there’s not much benefit from knowing this, apart from a look at wider trends.
Wall Street analysts have now caught onto one of his lesser-known holdings: Chubb Limited (NYSE: CB), which recently received several price target upgrades after an earnings beat. The stock is currently trading at $284.64, after having rallied by 25.20% on a year-to-date (YTD) basis
Buffett’s investment in Chubb was initially kept under wraps
Chubb Limited, a global insurance powerhouse, has recently attracted Buffett’s interest, as revealed in his May 2024 disclosure of a $6.7 billion investment. Notably, Buffett initially kept this under wraps through ‘confidential treatment,’ allowing him to quietly increase his holdings before alerting the broader market
The Oracle of Omaha is generally an open book — freely sharing his views and criteria for finding businesses worth investing in. However, as one would expect, this usually results in other investors piling in and driving prices up.
Usually, this isn’t a problem — Buffett is, after all, the paragon of value investing — but on three occasions since the beginning of the decade, he has asked for confidential treatment, essentially allowing him to build up a stake without alerting the wider market. All in all, he had been quietly shoring up his CB position for close to a year before disclosing it.
Analysts revise CB stock price targets after earnings beat
Chubb released its Q3 2024 earnings report on October 29. The results were quite good — earnings-per-share (EPS) came in at $5.72, outpacing estimates of $4.93 by 16%. Revenue was reported at $15 billion — a 6.5% improvement over this time last year.
Q3 2024 marks the insurance business’s sixth consecutive quarter of beating expectations. Two key areas also showed strong signs of growth — property and casualty (P&C) underwriting grew by 11.7%, while net investment income rose by 15.9%.
Equity researchers reacted with increased price targets — although readers should keep in mind this is a value play, so the theses don’t include huge growth in terms of capital appreciation.
Top analyst Matthew Carletti of JMP Securities was the most bullish — maintaining a prior ‘Market Outperform’ rating while raising his price target to $325 from $300.
Should this mark be reached, it would represent a decent, 14.44% upside from the current Chubb stock price. In a note, the analyst suggested that the company’s larger-than-average exposure to global markets will drive better growth over the long run when contrasted with competitors.
A similar sentiment was echoed by David Motemaden of Evercore ISI Group, who likewise issued an ‘Outperform’ rating — albeit with a more conservative price target of $293.
Finally, Morgan Stanley’s (NYSE: MS) Michael Phillips reiterated an ‘Equal Weight’ rating, increasing the price target from $295 to $300.
