What Happened?

Shares of beer, wine, and spirits company Constellation Brands (NYSE:STZ) jumped 8.7% in the pre-market session after Warren Buffett's Berkshire Hathaway revealed a position in the company (STZ) worth roughly $1.2 billion in the fourth quarter of 2024. Given Buffett's reputation for identifying quality opportunities in the stock market, the market is likely to read the information positively for the company's prospects in the near term.

After the initial pop the shares cooled down to $169.87, up 4.2% from previous close.

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What The Market Is Telling Us

Constellation Brands’s shares are not very volatile and have only had a move greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was about a month ago when the stock dropped 16.7% on the news that the company reported weak fourth quarter results, which fell below Wall Street's expectations for most of the key metrics we track, including sales, operating profits, and earnings. In addition, management lowered full-year earnings guidance, which is worrisome. Overall, this was a challenging quarter for the company.

Constellation Brands is down 23.7% since the beginning of the year, and at $169.87 per share, it is trading 37.6% below its 52-week high of $272.04 from March 2024. Investors who bought $1,000 worth of Constellation Brands’s shares 5 years ago would now be looking at an investment worth $833.35.

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