Why not invest in Berkshire Hathaway?
Berkshire Hathaway doesn't pay dividends
With its 3-star rating, we believe Berkshire stock is fairly valued compared with our long-term fair value estimate. We've increased our fair value estimate to $600,000 per Class A share from $555,000 after updating our forecasts for the company's operating businesses and insurance investment portfolio.
Arguably, the biggest drawback to Berkshire stock now is that it will underperform if the market continues to boom. Berkshire shares have performed better in 2021, but they had been underperforming the S&P 500 prior to that – understandably so, given that Buffett has been sitting on an ever-growing pile of cash.
Berkshire disclosed the risk of a lawsuit against its unit over its alleged failure to cover $356 million in costs associated with the 2020 Slater wildfire in southern Oregon and northern California.
It owns a variety of well-known private businesses, such as GEICO, and also has minority interests in public companies, such as Apple. Risks of being a Berkshire investor include issues of regulatory challenges and being a conglomerate, as well as the performance of successors when Warren Buffett retires or dies.
Over the past decade, Berkshire's beta is 0.63, showing it experiences significantly less volatility than the broader market. For these reasons, Berkshire Hathaway is an excellent stock to add to your portfolio today and hold for the long haul.
"Slightly better" than the average American corporation
Since Buffett took control of Berkshire Hathaway in 1965, the stock has trounced the S&P 500. Its compound annual gain through 2023 was 19.8% versus 10.2% for the broader index.
Key Points. Berkshire's returns have slowed in recent decades, but the company continues to beat the market. All of the reasons for Berkshire's historic success remain in place. For patient investors, this is still a great time to buy Berkshire stock.
Berkshire created two share classes in 1996 to make investing more accessible. Both share classes offer essentially the same exposure to the company's success. Most investors are better off sticking with Class B shares for their flexibility and affordability.
Key Points. Berkshire delivers solid returns with less volatility. It owns a high-quality portfolio of companies and publicly traded stocks. Buffett's company has a massive cash position that it can use to capitalize on opportunities in the next downturn.
What was Berkshire Hathaway's biggest mistake?
Buffett has turned that failing textile business into a massive conglomerate. Berkshire no longer deals in textiles, with Buffett giving up that particular fight in 1985. Sticking with the textile business may have been one of Buffett's biggest mistakes as CEO of Berkshire Hathaway.
Greggory Warren: Well, about a decade ago, we really started noting in our research that we felt that Berkshire would survive the eventual departure of both Buffett and Munger and that there was a groundwork there for a successful transition that they really started around the new millennium.
The big changes at Berkshire will come when Buffett is gone. The likely post-Buffett leadership team will be Abel as CEO, Jain overseeing the insurance businesses, and Ted Weschler and Todd Combs, who now run about 10% of Berkshire's $350 billion equity portfolio, overseeing the investment operations.
The one stock he definitely owns, of course, is Berkshire Hathaway. Buffett is Berkshire's largest shareholder.
Data from Bespoke Investment Group shows that every time the S&P 500 dropped 20% or more, Berkshire stock beat the index by a median of 14.89 percentage points. It achieved this distinction through a combination of focusing on long-term investment horizons, keeping a lot of cash on hand, and favoring dividend stocks.
Key Takeaways. Berkshire Hathaway owns businesses in insurance, rail transportation, energy generation and distribution, manufacturing, and retailing. The company is also a large stakeholder in many prominent companies in the U.S., such as American Express and Coca-Cola.
5. Approach your investments with a long-term mindset. One of the most important Warren Buffett quotes on investing that you can take in is, "If you aren't willing to own a stock for 10 years, don't even think about owning it for 10 minutes."
Just know that a $250 investment is no longer even possible. The company's B shares -- its cheapest share class -- now trade at around $400. If you can meet that minimum investment, putting the money into Berkshire still makes a ton of long-term sense.
These were the stocks Buffett had in his portfolio heading into 2024. Some top picks of Berkshire are Apple Inc. (NASDAQ:AAPL), Coca-Cola Co (NYSE:KO) and Chevron Corp (NYSE:CVX).
Berkshire Hathaway competitors include BlackRock, Howard Hanna Real Estate Services, Allstate, Allegheny Technologies and The Carlyle Group. Berkshire Hathaway ranks 1st in Customer Net Promoter Score on Comparably vs its competitors.
Who owns the most Berkshire Hathaway stock?
The top three individual shareholders are Warren Buffett, Susan Buffett, and Ronald Olson. The company's top three institutional shareholders are Vanguard, BlackRock, and State Street.
Berkshire Hathaway stock held strong in 2022, making a slight gain compared to a loss of more than 19% for the S&P 500. But it lagged in 2023 rising about 16% compared to the S&P 500's gain of 24%. So far this year it is up around 16%. All-around performance is strong, but not quite ideal, for Berkshire Hathaway stock.
As of 2024-04-25, the Fair Value of Berkshire Hathaway Inc (BRK.B) is 1,113.71 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 405.95 USD, the upside of Berkshire Hathaway Inc is 174.3%.
According to the latest long-term forecast, Berkshire Hathaway price will hit $450 by the end of 2024 and then $500 by the middle of 2025. Berkshire Hathaway will rise to $600 within the year of 2027, $700 in 2028, $800 in 2030, $900 in 2032 and $1000 in 2034.
There's a good reason for this fame: Berkshire Hathaway stock has been one of the best-performing investments in history, compounding value at market-beating rates for decades.
