Some might want to wait until Berkshire's valuation is more attractive to buy the stock. However, I think Berkshire Hathaway remains an excellent pick for long-term investors. Bank of America is an advertising partner of Motley Fool Money.
Although there's no telling where BRK. B shares could be 20, 30 or 40 years from now, it's possible to get a rough idea of the 10-year horizon. By some forecasts, shares of Berkshire could trade as high as $900 by 2034.
The Journal noted the company's cash hoard is likely a reflection of how its current situation prevents it from making major moves. Berkshire would currently have to pay a premium of 20% or more in any sort of takeover.
Ten Year Stock Price Total Return for Berkshire Hathaway is calculated as follows: Last Close Price [ 453.56 ] / Adj Prior Close Price [ 149.17 ] (-) 1 (=) Total Return [ 204.1% ] Prior price dividend adjustment factor is 1.00.
Better performance track record
More importantly, though, Berkshire has handily beaten the S&P 500 over the long term. Between 1965 (when Buffett gained control of the company) and 2023, Berkshire's compounded average annual return was 19.8% compared to only 10.2% for the S&P 500.
5Y total return of 94.31% is in the top 25% of its industry. YTD total return of 0.92% is in the top 25% of its sector.
Warren Buffett's conglomerate Berkshire Hathaway currently holds more than $325 billion in cash and equivalents, according to the firm's quarterly financial statements, most of it in U.S. Treasury bills.
Despite being a large, mature, and stable company, Berkshire Hathaway does not pay dividends to its investors. Instead, the company chooses to reinvest retained earnings into new projects, investments, and acquisitions.
Total debt on the balance sheet as of September 2024 : $124.50 Billion USD. According to Berkshire Hathaway 's latest financial reports the company's total debt is $124.50 Billion USD. A company's total debt is the sum of all current and non-current debts.
Class A shares offer a long-term investment but little chance of a stock split down the line. Investors looking for flexibility might prefer to invest in Berkshire's Class B shares. They can add to their stake or trim it from time to time without dealing in the six-figure numbers that a single Class A share represents.
After seven straight days of gains that propelled Berkshire Hathaway's Class A shares 6.8% higher, the stock closed today at a fresh all-time high of $582,300 per share. Over the past five years, they have increased by almost 92% vs. the S&P's 83.5% gain, excluding dividends.
Berkshire Hathaway Inc.'s (NYSE:BRK-B) competitive edge lies in its diversified business model and strong financial record, making it one of the safest stocks to buy according to analysts. According to Insider Monkey's database, 120 hedge funds held stakes in Berkshire Hathaway Inc. (NYSE:BRK-B), as of Q3 2024.
The abovementioned argument, coupled with BRK-B trading at the higher end of its historical range, led the author to the conclusion that BRK-B is overvalued relative to the market.
Berkshire Hathaway (23%)
As of the end of the third quarter, the Gates Foundation trust fund held about 22 million shares of Berkshire Hathaway. Those shares are worth about $10 billion as of this writing.
Average Price Target. Based on 2 Wall Street analysts offering 12 month price targets for Berkshire Hathaway B in the last 3 months. The average price target is $490.50 with a high forecast of $531.00 and a low forecast of $450.00. The average price target represents a 10.81% change from the last price of $442.66.
The answer may lie in a combination of market valuations, shifting investment priorities, and preparations for future uncertainties. While some analysts view this cash position as a drawback, others see it as a deliberate move by Buffett, staying true to his philosophy of being fearful when others are greedy.
Warren Buffett's succession plan names vice chairman Greg Abel to succeed the Oracle of Omaha.
Berkshire Hathaway's massive cash pile, coupled with the reduction in stock holdings, signals that Buffett is navigating the current market with a keen sense of caution. It's not that he has lost faith in the stock market, but rather that he believes the market is overvalued and may be due for a correction.
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.