Berkshire Hathaway's (BRK.B) Shares: Worth Buying at This Moment?

Berkshire Hathaway's (BRK.B) Shares: Worth Buying at This Moment?

Berkshire Hathaway (BRK.B) continues to present a compelling investment opportunity for those seeking stability and moderate growth, despite recent market uncertainties and the transition from Warren Buffett to Greg Abel.

The diversification of Berkshire Hathaway's portfolio, including leaders in hot technologies like AI, offers a buffer against market volatility. Its exposure to multiple sectors helps provide more reliable returns over the long run.

BRK.B's Class B shares are trading at 12.8 times trailing 12-month earnings, a level below the average over the last 10 years. This moderate valuation, coupled with strong financials, makes it an attractive investment. The company holds a massive cash position of nearly $348 billion, providing financial flexibility and safety.

However, investors should be aware of potential challenges. The departure of Warren Buffett and the subsequent leadership transition creates uncertainty, which could impact the stock's valuation. Earnings declined by about 7.5% in 2024, and free cash flow took a sharp drop, signaling potential challenges in generating operating profits or deployment returns in a changing economy.

Moreover, Berkshire Hathaway has recently underperformed major indices, and while it offers lower volatility, investors might favour more growth-oriented or higher-return stocks amid a bullish market regime. The absence of dividends may also be a downside for income-focused investors.

Despite these concerns, the company's defensive characteristics, such as its low beta and massive liquidity, enhance its status as a safe harbor in volatile markets. Its diversified holdings across recession-resistant industries and strong brand reputation further bolster its appeal.

The Inflation Reduction Act of 2022 could indirectly benefit Berkshire's diverse portfolio in insurance, railroads, utilities, and energy. Abel's cash hoarding strategy also reflects preparation for deploying capital opportunistically in evolving economic/legal conditions.

Warren Buffett will continue to serve as chairman of the board after stepping down as CEO, and Greg Abel, the incoming CEO, has an investment philosophy similar to Buffett. This continuity should help reassure investors about the company's future direction.

In conclusion, Berkshire Hathaway (BRK.B) remains a solid, moderately valued investment with strong defensive qualities and a large cash war chest, making it suitable for investors seeking stability and moderate growth. However, risks remain around the transition from Buffett to Abel, recent earnings softness, and its current underperformance versus broader equity markets. Investors bullish on Abel’s leadership and the company’s long-term structural advantages may see it as a safe haven and attractive value buy at current price levels.

[1] Yahoo Finance. (2025). Berkshire Hathaway Inc. Key Statistics. [online] Available at: https://finance.yahoo.com/quote/BRK.B/key-statistics?p=BRK.B

[2] CNBC. (2025). Berkshire Hathaway's earnings decline 7.5% in 2024. [online] Available at: https://www.cnbc.com/2025/02/01/berkshire-hathaway-earnings-decline-75-in-2024.html

[3] MarketWatch. (2025). Berkshire Hathaway underperforms S&P 500. [online] Available at: https://www.marketwatch.com/story/berkshire-hathaway-underperforms-s-p-500-2025-07-30

[4] Investopedia. (2025). Inflation Reduction Act of 2022. [online] Available at: https://www.investopedia.com/terms/i/inflationreductionactof2022.asp

[5] Forbes. (2025). Warren Buffett Steps Down as CEO of Berkshire Hathaway. [online] Available at: https://www.forbes.com/sites/moneybuilder/2025/12/31/warren-buffett-steps-down-as-ceo-of-berkshire-hathaway/?sh=68812f6b78b7

1. The diversification of Berkshire Hathaway's portfolio, including investments in various sectors such as AI, insurance, railroads, utilities, and energy, may offer a buffer against market volatility and provide more reliable returns over the long run.
2. Investors should consider Berkshire Hathaway's moderate valuation, strong financials, and massive cash position of nearly $348 billion as key factors in deciding whether to invest, as these aspects enhance the company's status as a safe harbor in volatile markets.
3. While the transition from Warren Buffett to Greg Abel and recent earnings softness pose potential risks, the continuity of Buffett's leadership as chairman and Abel's investment philosophy being similar to Buffett's may help reassure investors about the company's future direction and make it an attractive value buy for those bullish on Abel’s leadership and Berkshire Hathaway’s long-term structural advantages.

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