What are the risks of investing in Berkshire Hathaway?
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.
Berkshire Hathaway doesn't pay dividends
In the comparison to the S&P 500 Index above, the performance figures include reinvested dividends. That is a benefit for the S&P 500, but has no impact on Berkshire Hathaway's performance because the company doesn't pay a dividend.
Over the long term, an investment in Berkshire Hathaway has trounced the performance of the S&P 500 Index. The chart below shows total return, which includes reinvested dividends. So if you look at historical results, you would be very attracted to Berkshire Hathaway, and for good reason.
The biggest challenge Buffett faces in driving outsize returns for shareholders comes down to the law of large numbers. Berkshire Hathaway isn't the $20 million company it was in the 1960s when Buffett first bought shares. It's not even the $100 billion company it was at the start of the century.
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.
Berkshire Hathaway can be a great lower-risk investment. Berkshire Hathaway (BRK.A -0.76%) (BRK.B -0.69%) needs no introduction. The Warren Buffett-managed conglomerate has a stellar track record of growing value for its shareholders. It can make a great long-term investment.
Has Berkshire Hathaway consistently beaten S&P 500 returns over a long period of time? Yes. Since 1965, Berkshire has done 20% compared to the S&P500s 10%. 57 years at 20% is in fact, crazy impressive.
The stock is roughly even with the index over the past 20 years with a 9.8% annualized return. That is despite dramatic growth in the company's operating profits and Buffett's coup in buying Apple stock, which is showing a nearly $150 billion gain for Berkshire.
| 1 Year | 10 Year | |
|---|---|---|
| BRK Class B Stock Fund | 36.06% | 12.86% |
| S&P 500 Index | 29.88% | 12.96% |
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.
Will Berkshire Hathaway survive after Warren Buffett?
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.
His biggest weakness is greed. He loves money too much that it interfered with his relationship with his family for a long time.
Berkshire Hathaway is an excellent business with steady cash flows and is coming off another solid year of earnings. Its growing cash pile gives Buffett and his team a lot of dry powder to put to work when the time is right. BRK. B cash and short-term investments (quarterly), data by YCharts.
Anyone can invest in Berkshire Hathaway if they have enough money to buy at least one Class B share (about $360 in late 2023). For comparison, hedge funds are open only to accredited investors, meaning those with a high income or net worth and who can meet the fund's minimum investment, which can be $1 million or more.
What stock did Warren Buffett recently buy? Buffett bought shares of Chevron, Occidental Petroleum, and Sirius XM Holdings in the fourth quarter of 2023.
Berkshire Hathaway is a large, diversified holding company led by renowned investor Warren Buffett that invests in the insurance, private equity, real estate, food, apparel, and utilities sectors. Despite being a large, mature, and stable company, Berkshire Hathaway does not pay dividends to its investors.
As of 2024-04-28, the Fair Value of Berkshire Hathaway Inc (BRK.B) is 1,113.21 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 402.1 USD, the upside of Berkshire Hathaway Inc is 176.8%.
- Berkshire Hathaway is well known for its massive investment portfolio of publicly traded companies.
- The conglomerate owns various businesses in transportation, energy, and insurance.
- The stock has more recently delivered returns similar to the S&P 500 index with much less volatility.
Key Points. Warren Buffett made his fortune by investing in individual companies with great long-term advantages. But his top recommendation for anyone is to buy a simple index fund. Buffett's recommendation underscores the importance of diversification.
| Symbol | Holdings | |
|---|---|---|
| Chevron Corp | CVX | 126,093,326 |
| Citigroup Inc | C | 55,244,797 |
| Coca-Cola Co | KO | 400,000,000 |
| Davita Inc | DVA | 36,095,570 |
What is Warren Buffett average return?
Warren Buffett has attained legendary status in the investment world, thanks to the incredible returns he has racked up over the past nearly-60 years at Berkshire Hathaway (BRK.B) . Buffett has generated average annual returns of 22%, doubling the S&P 500, since he got started in 1965, according to Yahoo Finance.
Berkshire Hathaway's stock performance is nothing short of incredible, as it has handily beat the S&P 500 Index over the long term. But it is not your typical company. It has a unique operating approach that suggests it should be looked at more like a mutual fund than a normal corporation.
Berkshire Hathaway's CEO, Warren Buffett, widely considered to be the most successful investor alive today, has merely matched the market's return over the past two decades. The fundamental question this raises for investors is how long we should give a manager the benefit of the doubt when failing to beat the market.
Berkshire Hathaway takes profit from its insurance company holdings and invests them in a portfolio of about 50 different stocks valued at around $380 billion. The company's wide range of products and brands makes it one of the most consistent stocks on the market today.
Nonetheless, Berkshire's class A shares have delivered a Jaws-dropping annualized return of 20.3% from 1965 to 2021 – more than double the S&P 500's annual 9.8% return over the same period.
