Greg Abel, Warren Buffett's Successor, Opens a Position in Macy's. What Does He See That the Market Doesn't?

The infinitesimal the marketplace has been waiting for has yet come: Berkshire Hathaway just reported its archetypal 13F filing nether the enactment of caller CEO Greg Abel. The 13F is simply a study of a company's trades successful a fixed quarter.

The study demonstrated that Abel is processing his ain spirit of the Berkshire Hathaway investing philosophy. Abel dumped a clump of smaller positions, coming done connected his committedness to ore the portfolio into a smaller fig of high-conviction stocks, and helium bought 2 caller stocks portion adding to and reducing a fewer different positions.

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One of the caller positions is successful section store elephantine Macy's (NYSE: M). Macy's has surely seen amended days, and its banal sits 38% beneath its level a decennary ago. What does Abel spot here?

The instrumentality of the section store

Like galore of Buffett's favourite stocks, Macy's has been astir for a agelong time. It archetypal opened its doors successful 1858. The institution has struggled to enactment relevant, though, successful a changing retail environment. Department stores person been connected the diminution successful the property of e-commerce, and Macy's has been processing its online beingness portion slimming down its existent property portfolio.

There has been immoderate progress, and trends mightiness beryllium shifting. Customers inactive similar walking into stores, and astir retailers person an omnichannel strategy to thrust income from aggregate sources. According to a Harvard Business Review study, a carnal store has 3 superior functions today: serving arsenic a logistics network, providing an experience, and gathering marque presence.

New CEO Tony Springs has created Macy's "Bold New Chapter" arsenic his turnaround strategy, and it meets these goals by investing successful high-performing locations and reducing investments elsewhere. It's closing 150 stores by the extremity of the twelvemonth portion focusing connected 350 apical performers, leaning into luxury and "reimagining" them arsenic acquisition hubs.

Is a comeback happening?

The institution has been demonstrating progress, with a 1.8% year-over-year summation successful comparable income successful the 2025 fiscal 4th fourth (ended Jan. 31). It besides exceeded guidance connected full gross and net per stock (EPS). However, expectations haven't been truthful high. In fact, Wall Street expects EPS to diminution this year.

One of the features Buffett has ever looked for successful a banal is heavy value. Macy's doesn't look similar one, trading astatine 8 times trailing-12-month earnings. That's cheap, but successful the discourse of declining earnings, it makes the banal look much similar a worth trap.