<div id="readability-page-1"><div> <h2>Key Points</h2><ul><li>Berkshire Hathaway sold all its Amazon shares, which isn't too surprising on closer inspection. </li><li>The conglomerate invested in a well-known retailer whose prospects are improving. </li><li>10 stocks we like better than Macy's ›</li></ul>Greg Abel took over from Warren Buffett as CEO of Berkshire Hathaway at the beginning of the year. His first quarter at the helm was eventful. Abel and his team closed several positions while buying shares in new companies. Some of his choices were not surprising. For instance, Apple remains Berkshire Hathaway's largest holding, which everyone expected. Another decision the conglomerate made that may seem odd at first but actually makes sense is the choice to get rid of Amazon (NASDAQ: AMZN).<img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg3MzE4Mi9wZXJzb24td29ya2luZy1hdC1hLWRlc2suanBnJnc9NzAw?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vZy5mb29sY2RuLmNvbS9lZGl0b3JpYWwvaW1hZ2VzLzg3MzE4Mi9wZXJzb24td29ya2luZy1hdC1hLWRlc2suanBnJnc9NzAw"/>Image source: Getty Images.Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an &#34;Indispensable Monopoly&#34; providing the critical technology Nvidia and Intel both need. Continue » <h2>Why Berkshire Hathaway dumped Amazon</h2>Amazon is a leader in e-commerce and cloud computing. It provides exposure to several other markets. The company's revenue and earnings are growing at a good clip, and it has attractive long-term prospects across several niches in which it competes. Further, Amazon benefits from a wide moat from its brand name, network effects, and switching costs. All of these factors (and more) arguably make the stock an attractive long-term bet and one that, to some extent, aligns with the criteria prominent in the Buffett school of investing.However, Amazon made up a small percentage of Berkshire Hathaway's portfolio. The conglomerate owned about 2.3 million shares as of the fourth quarter. That accounted for a tiny portion of Berkshire's massive $263 billion portfolio. Further, Abel and his team sold many of the stocks (including Amazon) managed by Todd Combs, who left the company in December to join JPMorgan. So, it wasn't a particularly shocking move. Let's look into one decision Abel made during the first quarter that seems like far more of a head-scratcher. <h2>Berkshire buys a stake in a legacy retailer</h2>Berkshire Hathaway bought about three million shares of Macy's (NYSE: M). At first glance, this looks like a dubious decision. Macy's has faced significant problems in recent years -- in fact, the last decade has not been kind to the retailer. The shift to e-commerce and the decline in mall and department store foot traffic have led to poor financial results. Meanwhile, Macy's has faced growing competition from a variety of sources, not just online stores. The company has struggled to grow revenue at a good clip for a long time, and the strongest top-line increase in recent years came after the pandemic, when customers who had been stuck at home finally had the opportunity to go out again.<img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vbWVkaWEueWNoYXJ0cy5jb20vY2hhcnRzLzU1MDdjMTY3OWI1OWUwOTQyMmMxMDM2NDk1MDRiYTlkLnBuZyZ3PTcwMA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="428" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-dXJsPWh0dHBzOi8vbWVkaWEueWNoYXJ0cy5jb20vY2hhcnRzLzU1MDdjMTY3OWI1OWUwOTQyMmMxMDM2NDk1MDRiYTlkLnBuZyZ3PTcwMA"/>M Revenue (Quarterly YoY Growth) data by YCharts In fairness, Macy's has made some progress. More recent financial results have been stronger amid a push to turn things around. The company notably decreased its retail footprint by closing many unprofitable stores and selling off real estate assets while making a push in e-commerce. It's also admirable that Macy's has survived this long, especially as other legacy retailers weren't so lucky and have now gone out of business. However, can Macy's deliver strong returns from now on? Or is there another reason Abel and his team got in the game? Perhaps Berkshire Hathaway is attracted to Macy's real estate holdings because they may be more valuable than the market is giving the company credit for. It's in that sense that the retail giant may be &#34;undervalued.&#34; We could also look at traditional valuation metrics. Macy's is trading at 10.2x forward earnings, which is lower than the consumer discretionary average of 26.2. Macy's also appears undervalued by this standard, at least at first glance. It's also worth pointing out that in the first quarter of its fiscal year 2026, ending on May 2, Macy's net sales increased by 1.8% year over year to $4.7 billion, while comparable sales grew 3% year over year. The company's adjusted earnings per share climbed to $0.13, 18% higher than the year-ago period.The company beat Wall Street estimates on the top and bottom lines. Macy's increased its guidance for its full fiscal year 2026 as well. Macy's is moving in the right direction. There is plenty of risk remaining here, and that's probably one reason why Berkshire Hathaway did not buy enough of the company's shares to make it anything close to a top holding in its portfolio. However, at current levels, Macy's might be worth a second look for contrarian value investors. <h2>Should you buy stock in Macy's right now?</h2> Before you buy stock in Macy's, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Macy's wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $439,632!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,316,532!* Now, it’s worth noting Stock Advisor’s total average return is 959% — a market-crushing outperformance compared to 210% for the S&amp;P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of June 5, 2026. JPMorgan Chase is an advertising partner of Motley Fool Money. Prosper Junior Bakiny has positions in Amazon and Berkshire Hathaway. The Motley Fool has positions in and recommends Amazon, Apple, Berkshire Hathaway, and JPMorgan Chase. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. </div></div>

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Berkshire Hathaway CEO Greg Abel sold the firm's remaining Amazon shares and purchased approximately 3 million shares of Macy's. The Amazon sale, partly attributed to departing manager Todd Combs' portfolio adjustments, was not surprising given its small weight in Berkshire's $263 billion portfolio. Conversely, the Macy's investment appears counterintuitive due to the retailer's historical struggles with e-commerce competition and declining foot traffic. However, Berkshire may view Macy's as undervalued, citing improved financial results, strategic store closures, real estate assets, and a low forward earnings multiple compared to industry averages.

- Berkshire Hathaway sold all its Amazon shares, reallocating focus to investing in Macy's, despite its declining retail performance.  
- The decision to divest from Amazon was influenced by its small share in Berkshire's $263 billion portfolio and leadership changes, while Macy's shows recent improvements in sales and earnings.  
- Although Macy's faces challenges, its potential undervaluation and asset worth may attract contrarian investors, even as it does not make the list of top recommended stocks.

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Warren Buffett's Successor, Greg Abel, Dumped Amazon and Bought 3 Million Shares of This Undervalued Stock