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Key Takeaways
- Chubb shares jumped more than 8% in late trade Wednesday evening after Warren Buffett’s Berkshire Hathaway revealed a $6.7 billion stake in the insurer.
- Buffett recently told shareholders that property-casualty insurance provides the core of Berkshire’s well-being and growth.
- Berkshire had been building its position in Chubb since 2023, but had not previously disclosed the stake after the SEC granted it permission to keep the holding confidential.
- A measured move in Chubb stock indicates a potential increase up to around $284.
Chubb (CB) shares climbed more than 8% in late trading Wednesday evening after a regulatory filing revealed that Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) has taken a sizeable stake in the Zurich-based insurer.
According to the filing, Berkshire’s stake of nearly 26 million shares in Chubb, one of the world’s largest publicly traded property-casualty insurers, had a market value of around $6.7 billion as of March 31, making it the conglomerate’s nineth largest holding.
Rationale Behind Berkshire’s Chubb Investment
Berkshire, which also holds GEICO and National Indemnity, among other insurers, has a heavy footprint in the insurance industry, with Buffett recently telling shareholders that “property-casualty insurance (“P/C”) provides the core of Berkshire’s well-being and growth.”
Insurance businesses fit the legendary investor’s “buy and hold” philosophy because they provide a steady source of capital that can be deployed into long-term investments.
Although Berkshire had been building its position in Chubb since 2023, it had not previously disclosed the stake after the Securities and Exchange Commission (SEC) granted the conglomerate’s request to keep the holding confidential. Institutional investors may want to withhold disclosing a position to avoid revealing ongoing patterns of buying and selling.
Where is the Chubb Stock Headed Next?
Since bottoming out in June last year, the Chubb share price has continued to track higher, with the trend gathering momentum after the 50-day moving average (MA) crossed above the 200-day MA to form a bullish golden cross signal. More recently, the stock has traded within as ascending triangle, a chart pattern indicating a continuation of the longer-term uptrend.
Given the stock sits poised to climb to a record high following the Berkshire news, investors can use a measured move to forecast where the stock may be headed next. To do this, measure the distance of the start of the triangle in dollars, about $24, and add that amount to the pattern’s top trendline near $260. This implies a potential move to around $284. .
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As of the date this article was written, the author does not own any of the above securities.