Between Change and Undervaluation – Berkshire Hathaway, Porsche, RE Royalties, Volkswagen and Warren Buffett

Warren Buffett Steps Down: What Will Become of Berkshire’s USD 1.3 Trillion Empire?

One of the most successful careers in stock market history is coming to an end: At age 96, Warren Buffett is stepping down as chairman of Berkshire Hathaway. The “Oracle of Omaha” transformed a struggling textile company into a conglomerate with a market capitalization of more than USD 1 trillion. Now his son Howard is taking over as chairman of the board, while Greg Abel is already leading the company’s day-to-day operations. Buffett will remain with Berkshire as a board member and chairman emeritus.

For shareholders of the Berkshire Hathaway Class B stock (WKN: A0YJQ2 | ISIN: US0846707026 | Ticker: BRYN), the focus is less on the formal resignation and more on future capital allocation. Berkshire is not a traditional asset manager, which is why its total assets of approximately USD 1.26 trillion are not directly comparable to a fund’s assets under management. However, the published US stock portfolio totaled USD 299.3 billion as of June 30.

This portfolio is highly concentrated. Apple (WKN: 865985 | ISIN: US0378331005 | Ticker: APC) is the largest holding at approximately 22.0%. It is followed by American Express (WKN: 850226 | ISIN: US0258161092 | Ticker: AEC1) at 17.1%, Coca-Cola (WKN: 850663 | ISIN: US1912161007 | Ticker: CCC3) at 10.9%, Alphabet (WKN: A14Y6F | ISIN: US02079K3059 | Ticker: GBEA) at 9.4%, and Bank of America (WKN: 858388 | ISIN: US0605051046 | Ticker: NCB) at 9.2%. Together, these five heavyweights account for nearly 69% of the reported stock portfolio.

These companies are not directly affected by Buffett’s retirement. However, it will be interesting to see whether Abel and the investment managers will hold onto these holdings with the same patience or restructure the portfolio more significantly. The substantial increase in Alphabet’s holdings could already indicate that Berkshire is taking a more technology-friendly approach under the new leadership. Berkshire’s liquidity reserve is particularly impressive. As of the end of June, the company held USD 35.1 billion in cash and USD 324.9 billion in short-term US Treasury bills. In total, approximately USD 359.2 billion was invested in highly liquid assets.

Currently, three-month Treasury bills yield about 4.07%, six-month bills yield 4.26%, and twelve-month bills yield 4.40%. If these yield levels persist, the Treasury bills alone could theoretically generate about USD 13 to USD 14 billion in annual pre-tax interest income.

Ten-year US Treasury bonds now yield 5.00%, while thirty-year bonds yield as much as 5.33%. Nevertheless, Berkshire focuses primarily on short maturities, keeping price risk low and remaining able to act at any time in the event of acquisitions or stock market crashes. It is precisely this enormous financial leverage that the new leadership will decide on in the future. So far, the chart signals confidence.

At around USD 510, the Berkshire stock is trading above the 50-day moving average (MA50) of USD 505.12, the 100-day moving average (MA100) of USD 495.15, and the 200-day moving average (MA200) of USD 492.62. The long-term uptrend therefore remains intact. The crucial question now is: Can Berkshire maintain its investment culture even without Buffett at the helm?

RE Royalties: Small Valuation, Significant Financing Effect

The global power market is entering a new investment phase.
Electrification, data centres, and AI are driving demand for reliable capacity, while in the US, approximately 86 GW of new power plant capacity is expected to come online by 2026. Of this, 51% will come from solar, 28% from battery storage and 14% from wind – meaning that 93% in total will come from technologies where specialized capital providers can find particularly attractive entry points. This is where RE Royalties (WKN: A2PN0F | ISIN: CA75527Q1081 | Ticker: Y2V) comes in: The company provides financing to project developers and, in return, secures long-term, revenue-based royalty payments without assuming the full risks of project development and operation.

The operational substance of this model is now evident. According to the company, RE Royalties has invested more than CAD 80 million since its founding and built a portfolio of more than 130 energy projects across several regions. The return on capital employed to date stands at over 19%, which appears high in the infrastructure and financing sectors but also reflects the greater complexity of smaller, specialized transactions. Added to this is a dividend of CAD 0.04 per share, which stands out significantly at the current valuation level of CAD 0.37.

Of particular importance at present is the expanded partnership with Solaris Energy. In early August, RE Royalties increased its existing investment by an additional USD 1 million to a total of USD 4.8 million; at the same time, it signed a letter of intent for additional financing of up to USD 62.7 million. Together, the potential volume would total USD 67.5 million and would encompass 16 already-financed facilities as well as a prospective 96 additional solar projects totalling approximately 190 MW. The agreed-upon cash flows are structured for a minimum of 25 years and continue thereafter for the remaining useful life of the plants, increasing the visibility of future cash flows—provided the project pipeline is converted into binding agreements.

So far, this potential has been reflected only to a limited extent in the stock market. A market valuation of only about CAD 17 million contrasts with an established portfolio, recurring revenues, and additional growth opportunities. Management therefore launched a strategic review in March 2026 and retained PwC Corporate Finance as an advisor; the review is examining partnerships, co-investments, financing optimizations, and, in extreme cases, even a sale of the company. At the same time, the company points to approximately CAD 20 million in short-term letters of intent, as well as an additional roughly CAD 200 million in potential investments currently under review. The bottom line is that RE Royalties remains a speculative small-cap stock whose investment thesis is based less on short-term euphoria than on the scalable monetization of the global expansion of renewable energy.

Volkswagen Shares Plummet: Porsche Drags VW Into a EUR 10 Billion Shock

For Volkswagen investors, the trading week ends with a bang.
Volkswagen shares (WKN: 766400 | ISIN: DE0007664005 | Ticker: VOW) plummeted by more than 8% at times in after-hours trading to around EUR 76.15. Porsche shares (WKN: PAG911 | ISIN: DE000PAG9113 | Ticker: P911) also came under pressure, losing around 3.3%. The trigger was a drastic profit warning that highlights how deep the problems have become at the Wolfsburg-based automaker. Volkswagen expects consolidated revenue of around EUR 315 billion for 2026. However, the new margin forecast hits investors much harder: Instead of the previously expected operating profit margin of 4.0 to 5.5%, the group now forecasts a maximum of just 1%. By comparison, analysts had anticipated an average of about 4.1%. Overall, one-time items are expected to weigh on operating profit by approximately EUR 10 billion.

Porsche is at the centre of this. Volkswagen must write down the goodwill of its sports car subsidiary by about EUR 6 billion. Although this amount is non-cash, it clearly illustrates how sharply previous earnings expectations have been scaled back. Porsche is suffering from weak demand in China, US tariffs, and the costly restructuring of its electric vehicle strategy. The once-profitable gem has thus become a problem costing billions for the entire VW Group. Additional burdens stem from expanded partial retirement programs, the planned sale of the Osnabrück plant, and further impairment charges in China. These factors alone are expected to reduce earnings in the second half of the year by an additional approximately 2 billion EUR. At the same time, Audi and the core Volkswagen brand are also struggling, while Chinese manufacturers are gaining more and more market share in the electric vehicle sector.

However, the situation is not quite as bleak as the profit warning initially suggests. Volkswagen is sticking to its forecast of a net cash flow of EUR 3 to 6 billion for the automotive division and net liquidity of EUR 32 to 34 billion. Adjusted for one-time items, the operating margin would be approximately 4%. The crisis is therefore less an immediate liquidity issue than a massive loss of confidence and a sharp decline in valuation. The majority of the one-time charges are expected to be booked as early as the third quarter. By the time the interim report is released on October 29, it should become clear just how costly the restructuring will actually be. The upcoming dividend amount is also likely to be up for debate as a result.

From a technical analysis perspective, Volkswagen shares are sending a clear warning signal. Trading around EUR 76, the stock is below the 50-day, 100-day, and 200-day moving averages—the brief recovery since the July low has ended for now. At Porsche, the latest attempt to break above EUR 47 also threatens to fail. For investors, the key question is: Is the plunge already an overreaction, or is the next wave of declines just beginning? As long as China, restructuring, and Porsche show no clear sign of a trend reversal, the supposedly undervalued Volkswagen stock remains a falling knife.

Following Warren Buffett’s retirement, Berkshire Hathaway faces the test of whether its new leadership can deploy its multibillion-dollar capital base with the same discipline that the investing legend demonstrated over recent decades. RE Royalties combines renewable energy expansion with a scalable royalty model, but its small size and reliance on financing keep it firmly in the speculative category. Following its profit warning and substantial write-downs related to Porsche, Volkswagen is struggling less with liquidity than with a significant loss of confidence in the capital markets.

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