In its regulatory filing last week, Warren Buffet’s Berkshire Hathaway unveiled an unexpected addition to the conglomerate’s portfolio: a stake in cosmetics retailer Ulta Beauty.
According to the filing, Berkshire snapped up 690,106 shares of Ulta Beauty, worth around $266 million in the second quarter.
The stake comes as a surprise, considering that Ulta Beauty struggled in 2024 and saw its stock drop 33% year-to-date. However, analysts believe that Buffet and Berkshire perceive the stock as undervalued.
“We view this development as a vote of confidence for the company’s longer-term prospects and a further validation of ULTA’s significantly discounted valuation,” Oppenheimer analyst Rupesh Parikh wrote in a note sent to clients.
Ulta Beauty, which is one of the biggest beauty product retailers in the U.S., had a promising second quarter in which it increased its sales by 3.5% compared to the same period in 2023. However, a lot of investors were unimpressed with CEO Dave Kimbell’s warning that the company would experience “a slowdown in the total category across price points and segments” and quickly sold off their holdings to send the stock crashing.
Ulta Beauty’s stock slightly recovered after Berkshire unveiled its stake in the company. It surged more than 17% for the week and closed at $377.06 per share on Friday.