Berkshire just disclosed in its latest SEC holdings filing that the stock it has been confidentially building an equity position in is property-casualty insurer Chubb Ltd (CB 253 ****). Berkshire disclosed that it owns some 25.9 million CB shares, worth about $6.6 billion, making the CB position a top-ten holding for Berkshire. Our view of CB is positive as well, and we believe the shares are undervalued versus peers. We expect CB shares to open higher tomorrow morning (May 16), as investors react to this news and speculate whether Berkshire will keep an equity stake in CB or pursue an outright acquisition. BRK’s current equity stake gives the firm exposure to one of the best performing financial sector subgroups at a below-peer valuation. We can’t speculate whether Berkshire would pursue an outright acquisition of CB, but we note their business mixes are highly complementary.