Ready to dive into the world of Berkshire Hathaway? Let's explore what makes this company a legendary name in the investment world and help you understand if it's a good fit for you.
Step 1: Understanding the Foundation - What is Berkshire Hathaway?
Before we can even begin to answer "how good is Berkshire Hathaway?", let's understand what it is. It's not just a single company, but a massive conglomerate, a collection of diverse businesses and investments spanning various sectors. Imagine a massive holding company that owns everything from insurance giants like GEICO and General Re to a major railroad (BNSF) and well-known brands like Duracell, Fruit of the Loom, and See's Candies.
Did you know that Berkshire Hathaway has been run by the legendary investor Warren Buffett since 1965? Under his leadership, the company has transitioned from a textile manufacturer into a business empire. His value investing philosophy has been the driving force behind its remarkable success.
 |
| How Good Is Berkshire Hathaway |
Step 2: Unpacking the Performance - A Look at the Numbers
Now that you have a sense of what Berkshire Hathaway is, let's look at its performance. The numbers speak for themselves.
Sub-heading: Historical Returns - A Track Record of Outperformance
From 1965 to 2024, Berkshire Hathaway delivered a compounded annual return of 19.9%, which is almost double the S&P 500's 10.4% return over the same period. This incredible performance has resulted in a total return of 5,502,284% for Berkshire Hathaway, compared to the S&P 500's 39,054% with dividends. This consistent outperformance over six decades is a testament to the company's investment strategy and management.
Sub-heading: Financial Strength and Key Ratios
Berkshire Hathaway is known for its financial strength and robust balance sheet.
Growing Profit Margin: The company's net profit margins are strong at 21.8%, higher than last year.
Return on Equity (ROE): While its ROE of 12.4% is considered low, its Return on Assets (ROA) is 7.4%, which is exceptional for a company with over $1 trillion in assets.
Cash Pile: As of Q1 2025, Berkshire Hathaway had a record cash reserve of nearly $347.7 billion, providing immense liquidity and capacity for future investments.
Earnings Growth: Berkshire has been growing its earnings at an average annual rate of 13.3% over the past five years.
QuickTip: Stop scrolling fast, start reading slow.
Sub-heading: Stock Price and Valuation
As of June 27, 2025, the Class B shares (BRK.B) have a price-to-earnings (P/E) ratio of 12.94. This is 37% lower than its 10-year historical average of 20.69. The company's stock has also outperformed the S&P 500 in the last 12 months, with a 20% return compared to the S&P 500's 13% growth.
Step 3: Understanding the Investment Philosophy
So, how does Berkshire Hathaway achieve such results? The answer lies in its unique investment philosophy.
Sub-heading: Value Investing and Long-Term Holding
Berkshire's investment strategy focuses on acquiring businesses with a durable competitive advantage, predictable cash flows, and strong management. This approach, known as value investing, involves buying quality companies at a fair price and holding them for the long term. This is a stark contrast to speculative investing, which focuses on short-term market trends.
Sub-heading: A Concentrated Portfolio
The company's U.S. equity portfolio is highly concentrated. As of the end of Q1 2025, its top five holdings make up 70% of the portfolio's value, while the top 10 account for 88%. The largest holdings include:
Apple Inc. (25.76%)
American Express (15.77%)
The Coca-Cola Company (11.07%)
Bank of America (10.19%)
Chevron Corp. (7.67%)
Sub-heading: The Power of "Float"
A core component of Berkshire's financial strength is its insurance operations, particularly through companies like GEICO and General Re. These businesses generate a significant amount of "float," which is the money collected from premiums before claims are paid. This float is essentially free investment capital that Berkshire can use to invest in stocks and businesses, further compounding its returns.
QuickTip: Treat each section as a mini-guide.
Step 4: Looking at the Leadership Transition
 |
A significant topic of discussion is the succession plan for Warren Buffett, who will be stepping down as CEO at the end of 2025.
Sub-heading: A Smooth Transition
The company's leadership is transitioning to a team that has been working alongside Buffett for years. Greg Abel, who oversees most of the company's investments and non-insurance operations, has been named as Buffett's successor. He is expected to continue the same value-investing philosophy that has defined Berkshire for decades.
Sub-heading: Decentralized Management
Berkshire Hathaway's management style is highly decentralized. While financial decisions are centralized at the top, the managers of individual business units have extreme operational autonomy. They are trusted to run their businesses with minimal corporate oversight, as long as they submit monthly financial statements and remit free cash flow to headquarters.
Step 5: Investing in Berkshire Hathaway - Class A vs. Class B
If you're considering investing, you have two options: Class A shares (BRK.A) and Class B shares (BRK.B).
Sub-heading: Key Differences
Tip: Don’t just scroll to the end — the middle counts too.
Feature | Class A (BRK.A) | Class B (BRK.B) |
Price | Significantly more expensive. As of April 22, 2025, one share was approximately $780,000. | More affordable. As of April 22, 2025, one share was approximately $520.79. |
Voting Rights | Has a higher voting right. Each share has 10,000 times the voting power of a Class B share. | Has significantly fewer voting rights. |
Convertibility | Can be converted into Class B shares. | Cannot be converted into Class A shares. |
Accessibility | Largely inaccessible to most retail investors due to the high price. Tip: Reading twice doubles clarity. | More affordable and accessible to a broader range of investors. |
10 FAQs about Berkshire Hathaway
How to attend the Berkshire Hathaway annual meeting? You need to own at least one share of Class A or Class B stock to attend. You will need to show identification and proof of stock ownership to get a meeting pass. The meeting in 2025 was held on Saturday, May 3, in Omaha, Nebraska, and featured a Q&A session with Warren Buffett, Greg Abel, and Ajit Jain.
How to watch the Berkshire Hathaway annual meeting? The Q&A sessions are typically broadcast on CNBC and webcast on CNBC.com.
How to find information about Berkshire Hathaway's portfolio? Information about Berkshire Hathaway's portfolio is disclosed in SEC filings. As of Q1 2025, it had 36 total holdings with a value of over $258 billion.
How to buy Berkshire Hathaway stock? You can buy Berkshire Hathaway's Class A (BRK.A) or Class B (BRK.B) shares through a brokerage account.
How to understand Berkshire Hathaway's dividend policy? Berkshire Hathaway famously does not pay dividends. Instead, the company's management believes that reinvesting cash into acquisitions and stock repurchases creates more shareholder value.
How to analyze the Berkshire Hathaway stock performance? You can analyze its stock performance by comparing its returns to market benchmarks like the S&P 500. Berkshire has consistently outperformed the S&P 500 over the long term.
How to find a list of Berkshire Hathaway subsidiaries? A list of the company's subsidiaries can be found on the Berkshire Hathaway website. These include companies like GEICO, BNSF, Dairy Queen, and many others.
How to understand the leadership at Berkshire Hathaway? Warren Buffett is the Chairman and CEO, and Greg Abel has been named as his successor. The company is known for its decentralized, delegative leadership style.
How to contact Berkshire Hathaway? The company's contact information, including physical addresses, is available on their website and in public filings.
How to submit questions for the annual meeting? Questions for the Q&A session can be submitted to CNBC's Becky Quick at berkshirequestions@cnbc.com. The on-premise questioners are selected randomly from the shareholders attending the meeting.
 |
