Berkshire Energy, a unit of Warren Buffett’s conglomerate, Berkshire Hathaway (NYSE:BRK.B), is facing potentially costly antitrust litigation surrounding real estate commissions. Last year, the National Association of Realtors and multiple other residential brokerages were found guilty of conspiring to artificially keep home sales commissions inflated. At the time, total liabilities were pegged at about $1.8 billion. As per antitrust rules, this figure could balloon to over $5 billion.
This week, the lawyers who won the landmark verdict have named Berkshire Hathaway Energy (BHE) as a defendant in a lawsuit, according to the Wall Street Journal. BHE owns HomeServices of America, one of the largest residential real estate brokerage names. Dragging BHE into the litigation could result in a major nationwide settlement for these cases. Notably, the plaintiffs have accused Buffett of endorsing the Berkshire name to promote HomeServices of America.
While the National Association of Realtors (NAR) may have limited resources, Berkshire’s humongous cash pile faces no such limitations. Reportedly, while NAR’s assets were around $1 billion at the end of 2022, Warren Buffet’s Berkshire is currently sitting on over $160 billion in cash and equivalents.
HomeServices plans to appeal the court’s verdict in the case. However, Berkshire recently cautioned that the unit could witness losses due to the size of the damages. The appeals process could get dragged out for years as well.
Over the years, Berkshire has become one of the biggest names in the residential real estate brokerage market. Still, an adverse court ruling will barely make a dent in Berkshire’s massive operations. Shares of the company have rallied by nearly 27% over the past year, taking its market capitalization ever closer to the $1 trillion mark.
Is BRK.B a Good Buy Right Now?
Overall, the Street has a Moderate Buy consensus rating on Berkshire Hathaway, and the average BRK.B price target of $441 implies a modest 9.3% potential upside in the stock. Shares of the company are currently trading at an attractive price-to-earnings multiple of 9.2.
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