Berkshire Hathaway's Greg Abel Just Bought 3 Million Shares of Macy's Stock. It Sure Looks Cheap, but Is It a Great Value?

Greg Abel, Berkshire Hathaway's new CEO, purchased 3 million shares of Macy's (M) in his first quarter at the helm, marking Berkshire's (BRK.B) inaugural position in the department store chain. The move puts a spotlight on a retailer trading at a price-to-earnings ratio of 10 with a 3% dividend yield.

Macy's reported 3% comparable sales growth in Q1, with particular strength in its luxury brands Bloomingdale's and Bluemercury driving performance. The valuation metrics position Macy's well below broader market multiples, though questions remain about whether the department store model fits Berkshire's traditional preference for durable competitive advantages.

Abel's first major stock pick diverges from Berkshire's recent focus on technology and financial services. The 3 million share purchase represents a relatively modest position for Berkshire but signals Abel's willingness to explore value opportunities in out-of-favor retail. The combination of single-digit P/E and dividend income aligns with classic value investing principles, even as the department store sector faces ongoing headwinds from e-commerce competition.