Berkshire Hathaway Inc (BRK/B) is a diversified financial services company run by one of the most famous investors in the world, Warren Buffett. Along with his business partner, Charlie Munger, they oversee an investment empire. Berkshire has two classes of stock. Most investors will purchase the B-class shares because the A-class shares are trading at about $470,000 per share! The major business of BRK is insurance. They own GEICO Insurance Company along with several other insurance companies and have built an empire from the insurance business. They also own a railroad, an electric utility, and a chocolate candy company. Berkshire Hathaway also franchises many Dairy Queen restaurants and owns a furniture store along with many other businesses.
What Berkshire is probably most known for are the investments the company makes in other companies, just like you would buy stocks of a company you like but on a larger scale. Berkshire’s top 5 holdings as of last September include Apple Inc, Bank of America, Chevron, Coca Cola, and American Express – all well-known American names. While some “smaller” investments are made by Berkshire’s investment managers, Buffett and Munger probably approve most of the larger investments and also what they would call “elephant investments” which are complete takeovers of larger companies they want to own. It is estimated that Berkshire Hathaway has $109 Billion in cash to use for any investments.
There is some (or a lot) of concern about the ages of Buffett and Munger (both in their 90’s). However, it is presumed that Greg Abel will replace Buffett as CEO. Abel oversees the non-insurance business of Berkshire Hathaway which includes most of the investments that are made. Ajit Jain is also seen as a successor and may share the leadership duties with Abel. He is currently the Vice-Chairman of Insurance Operations for BRK.
Over the last year, BRK/B has hit a high of $362.10 in March 2022 and slid to $259.85 in October 2022. BRK/B currently sits at about $309.00 per share. Berkshire Hathaway does not currently pay a dividend. Some money managers suggest selling off a share of two each quarter if you need income from this stock. I don’t like that idea, instead holding Berkshire for capital gains and using other stocks for dividend income. You can manage your portfolio as you need to, of course.
The stock price follows the economy to a great degree. However, Warren Buffett’s Berkshire Hathaway has a history of beating the S&P 500 return even though both can be seen as a market barometer. So, if a recession comes Berkshire’s stock will probably fall – although maybe not as much as the overall market. I look at BRK/B as a stock to buy on dips when you can and just hold. Long term, it will reward you for your patience.
As always, do your own due diligence before buying any stock. Full disclosure, I own shares of Berkshire Hathaway Class B. References include Schwab, Yahoo Finance and Wikipedia.
(Intentional Investing is a weekly column written by Kyle Smith from Floyd County, TX, based upon his investment knowledge and does not represent the views or opinions of the Floyd County Record)
