A recent regulatory filing revealed that Warren Buffett’s Berkshire Hathaway has significantly increased its investment in Constellation Brands, which specializes in beer and wine, during the last quarter. Nonetheless, not everyone shares Buffett’s enthusiasm. James DeMart, the chief investment officer at Main Street Research, appeared on CNBC’s “Power Lunch” and critiqued Buffett’s investment strategies while discussing a couple of other key market players.
Berkshire Hathaway’s stake in Constellation Brands has now reached around $2.2 billion. Constellation Brands, known for importing all Mexican beer, has faced a tough year, seeing an 11% decline in value due to President Donald Trump’s unexpected tariffs on imports from Mexico. On Friday, the company’s share price rose nearly 3% following the news of Berkshire’s increased investment. However, DeMart isn’t convinced about Buffett’s gamble. He remarked, “I don’t believe the stars will align for Constellation.” He pointed out that the company aims to generate $1 billion from tariffs this year alone.
In contrast, DeMart expressed confidence in Citigroup, noting that while Buffett sold his stake in the bank by the end of March, he considers Citigroup a strong buy. “Investors should generally have a positive outlook on financial stocks, and we believe in Citigroup for the same reasons,” he stated. He highlighted Citigroup’s low valuation, trading at nine times revenue, which he sees as an appealing opportunity. DeMart believes that impending deregulation in banking and increasing transaction revenues bode well for the sector, especially since finance generally remains unaffected by tariffs.
On another note, Novo Nordisk experienced a 3% drop in its stock price after CEO Lars Fruergaard Jørgensen announced his resignation due to ongoing market difficulties. Despite this leadership change, investors did not respond positively, leading to a 52% decline in their stock. “I think the company hoped firing its CEO would improve the situation with Wall Street,” DeMart observed.
