Succeeding With This Stock May Require Investors to Out-Buffett Warren Buffett. Here's Why.

Group 1: Investment Overview - Berkshire Hathaway sold more stock than it bought in 2024, raising questions about its investment in Constellation Brands, which has likely lost value due to tariff fears and declining alcohol consumption [1] - Constellation Brands appears to align with Buffett's investment philosophy, being a "forever" stock with enduring product demand, particularly as it produces the U.S.'s No. 1 beer, Modelo Especial [2] - The current valuation of Constellation Brands is low, with a forward P/E ratio of 15 and a price-to-sales (P/S) ratio of 3.4, down from 6 in 2022, indicating a significant discount [3] Group 2: Market Performance and Concerns - Constellation's stock performance has been poor, diverging from the S&P 500 since 2023, which may have prompted Buffett's team to see an investment opportunity [4] - Recent tariff concerns regarding imports, including Mexican beers and spirits, could lead to increased prices and decreased sales, potentially jeopardizing Modelo's market position [5] Group 3: Investment Strategy and Opportunities - Investors may have the chance to "out-Buffett" Buffett by purchasing shares at a lower valuation, as current P/S ratios are more favorable than those at which Buffett's team bought shares [6] - New shareholders could benefit from a higher dividend yield of about 2.2%, which is significantly above the S&P 500's approximate 1.5% yield [7] - Constellation Brands has consistently raised its dividend since 2015, with a free cash flow of $1.9 billion in fiscal 2025, indicating the potential for further dividend increases [8] Group 4: Future Considerations - While Berkshire's Q1 purchases remain unknown until the release of its 13-F, there is potential for investors to achieve better returns than Buffett if they buy at lower share prices [9] - Despite the uncertainties surrounding tariffs and consumption, the low valuation and prospects for rising dividends may present a compelling opportunity for investors to add Constellation shares [11]