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Chubb: Is Warren Buffett's Latest Buy Worth the Punt?

Published 16/05/2024, 11:59
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  • Berkshire Hathaway's 13F repository has just revealed the name of Warren Buffett's latest acquisition.
  • Here's an update on Chubb's profile, strengths and weaknesses
  • How can investors easily track and replicate Buffett's best positions?
  • Subscribe to InvestingPro for less than $9 a month and learn which stocks to buy and which to shun, whatever the market conditions!
  • The mystery has finally been solved! After three months of accumulating shares in a company whose name has been kept secret, Berkshire Hathaway (NYSE:BRKb) (NYSE:BRKa), helmed by the legendary Warren Buffett, has finally unveiled its latest acquisition.

    The recent 13F update filed with the SEC revealed the mystery company to be insurer Chubb (NYSE:CB). This investment choice aligns well with Berkshire's core business, considering its substantial holdings in insurance companies like GEICO and General Re.

    Additionally, it underscores Berkshire's recent focus on financial stocks, with recent additions to its portfolio including Ally Financial (NYSE:ALLY), American Express Company (NYSE:AXP), and Bank of America (NYSE:BAC).

    Not surprisingly, the announcement sent Chubb shares soaring, with the stock closing post-market trading with an impressive 8.32% gain.

    Amidst this excitement, millions of investors closely following Warren Buffett's moves are contemplating whether to add Chubb to their portfolios.

    In this article, we'll delve into Chubb's profile using InvestingPro and explore tools to track Warren Buffett's positions.

    Why did Warren Buffett Choose Chubb? An InvestingPro Overview of the Stock's Profile

    Chubb Limited, headquartered in Zurich, Switzerland, is a global insurer listed on the U.S. stock exchange. The company offers a diverse range of insurance and reinsurance products.

    As of Tuesday's closing price of $252.96, Chubb shares have gained 11.9% since the beginning of the year and over 26% in the past year. Despite a slight dip following its latest financial results on April 23, which caused a 2.62% drop in the subsequent session, the stock quickly rebounded, surpassing its post-results losses.

    Résultats Chubb

    Source: InvestingPro

    In addition to these solid financial results, the InvestingPro ProTips (which provide a more detailed analysis of the stock's strengths and weaknesses, without having to go into its financial data) are mostly positive, as can be seen below:

    ProTips Chubb

    Source: InvestingPro

    Chubb's health score, moreover, is rated "very good", implying a reduced risk profile.

    However, it is important to point out that analysts and valuation models attribute limited upside potential to the stock.

    In fact, the 22 analysts who follow the stock display an average target of $268.36, i.e. 6% above the current price.

    Objectifs Chubb

    Source: InvestingPro

    InvestingPro Fair Value, which synthesizes several recognized valuation models, is only slightly more optimistic, at $284.87, which translates into a bullish potential of 12.6% (although it should be noted that one of the models values the stock at $414, or 63.6% above the current price).

    On the subject of dividends, Chubb's payouts represent an annual yield of 1.36%, which is rather modest for a financial stock.

    Dividendes Chubb

    Source: InvestingPro

    However, the payout ratio of just 15.07% suggests that the company has room to increase the return to its shareholders.

    In fact, we can already see that the company has steadily increased its payouts over the past 10 years:

    Historique Dividendes Chubb

    Source: InvestingPro

    In conclusion, although Chubb is unlikely to double in value overnight, it is undoubtedly a stock with a solid profile, offering a good compromise between long-term potential and security, which is ultimately what we expect from the stocks chosen by Warren Buffett.

    How to invest Like Warren Buffett (or even better!) - Made Easy

    Those wishing to follow Buffett's positions as closely as possible and derive investment decisions for their own portfolios can turn to InvestingPro, Investing.com's fundamental analysis and stock market strategy platform, which offers two particularly useful tools for Warren Buffett fans.

    The "Ideas" section, which lists positions taken by major hedge funds and renowned investors, naturally covers Warren Buffett's portfolio:Idées portefeuilel BuffettSource: InvestingPro

    With one click, InvestingPro subscribers can copy each portfolio, including Buffett's, into a watchlist for further analysis, e.g. in an attempt to spot Warren Buffett's "best" stocks, instead of replicating his entire portfolio.

    This is precisely what the ProPicks "Buffett's best" strategy, also available on InvestingPro, does so brilliantly. This strategy uses artificial intelligence to identify the best stocks in which Warren Buffett invests.

    And the performance speaks for itself, as this strategy has delivered a total return of 358% since the start of its backtest in January 2013, representing an annualized return of 15.3%, and 149.6% more than the S&P 500 over the same period.ProPicks Le Meilleur de BuffettSource: InvestingPro

    Updated quarterly, this strategy is ideally suited to long-term investors like Warren Buffett.

    And with Berkshire Hathaway filing its quarterly 13F on Wednesday evening, the strategy's update is imminent, making now the perfect time to take advantage of it!

    If you're already an InvestingPro subscriber, you can access ProPicks and view the full list of stocks in each portfolio by clicking here.

    If you're not already an InvestingPro subscriber, now's the perfect time to take advantage of our limited-time 10% discount on 1 and 2-year Pro and Pro+ subscriptions!

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