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

Berkshire Hathaway's age of Greg Abel has begun. It can't be easy to take over after Warren Buffett's 60 years of building the company into the massive powerhouse it is today and cementing his legacy as one of the greatest investors ever, but Abel is diving right in. He had pledged to concentrate the stock portfolio into fewer high-conviction holdings, and he cut out about 16 small positions in his first quarter as CEO.

He did, however, also buy three new stocks, including department store retailer Macy's (NYSE: M). Macy's has been a public company for more than 30 years, and this is the first time Berkshire Hathaway has bought its stock. The retailer has been distressed as shopping habits change, and the stock trades at a P/E ratio of only 10. That's cheap, but is it a great value?

Image source: Macy's.

What went wrong, and what's going right

Macy's is still a major retailer, but it's gone through a transformation as trends move away from large and clunky department stores, which is Macy's bread and butter. It has closed hundreds of stores and redesigned others, and it's investing in its e-commerce channels.

The company owns three brands: Macy's, Bloomingdale's, and Bluemercury, and the latter two have been pulling more of the weight. In the 2026 first quarter (ended May 2), total comparable sales (comps) increased 3% over last year, its best showing in four quarters. The breakdown was Macy's comps up 1.6%, Bloomingdale's comps up 10.2%, and Bluemercury comps up 6.4%.

The Bloomingdale's performance was particularly excellent, with its highest first-quarter comps ever. That implies momentum, especially in the face of stubborn inflation. It's a luxury retailer, and not only is its target customer still shopping, they're choosing to do so at its stores.

Adjusted earnings per share (EPS) were $0.13, ahead of guidance and up from $0.11 last year.

Is Macy's stock a bargain?

If Abel is like his predecessor, he'll be looking for great businesses with strong management, a moat, and a fair value. With the goal of holding a stock forever, Berkshire Hathaway's management would be looking for a company that can create shareholder value over many years, not a quick turnaround story.

Does Macy's fit that? Its moat would be its strong brand, which still commands popularity and presence. With the smaller footprint, it can begin to operate more efficiently and profitably.

Buffett also loves companies that pay dividends, and Macy's dividend yields a high 3% at the current price.

I do think Macy's looks like a bargain right now, and it certainly looks like a good buy for passive income investors.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.