Warren Buffett is the most famous name in the financial markets. He is a man who has been interested in the industry since a very young age, just 11 years old, and is one of the most experienced investors living, now worth over $100B. This experience helps Berkshire Hathaway to be a great choice of investment for you. You can buy shares of Berkshire Hathaway class A or class B shares (BRK.A and BRK.B). Let’s look at the company in more detail.

Investment strategy

Warren Buffett has a tremendous track record, providing year over year returns with minimal risk. Buffett follows the Benjamin Graham school of value investing, which looks for securities whose prices are unjustifiably low based on their intrinsic worth. He ignores the smaller supply and demand intricacies of the stock market, and focuses on the companies as a whole. Some of the factors Buffett considers are: company performance, company debt and profit margins. Other considerations for value investors like Buffett include whether companies are public, how reliant they are on commodities and how cheap they are.

Buffett looks long term before investing in a company. So when looking to invest in Berkshire Hathaway, you should be thinking long term too. Some names that he has been a supporter of for many years are that such as: Apple, Bank of America, Coca-Cola and Kraft Heinz.

Performance

Let’s take a look at the recent performance of the company and also the long term returns it has made. In the past 12 months, BRK has made 22%. That includes a period from May until now where the stock has traded sideways (BRK.B range has been between $270 and $295). The 12 months following the March pandemic lows, they returned 56%. Berkshire really ramped up their growth following the 2008 market crash. Since March 2009, BRK has gained 530% in price. That’s roughly a 3.5% return per month or 40% per year on your original investment.

Our thoughts

BRK.A has a price of $431,575. Not the price that allows the general retail investor to pick up a few shares. BRK.B is more reasonably priced at $285.99, making it an attainable investment. So is it for you? Berkshire Hathaway won’t provide explosive growth that other firms do or if you were to invest into companies yourself. That’s providing you’d choose the right stocks which is unlikely for new investors. BRK offers a more consistent, low risk, experience driven choice. A great place to diversify your money if you are looking to make a return long term.

The returns over the last decade don’t differ too much from the S&P500. But we wouldn’t recommend using one index or fund to place your money. Diversify across several. Maybe BRK.B (or BRK.A), led by a man with 80 years experience, may be worth a small allocation of your money.

You could also take a look at a recent investment choice of ours, Disney and Virgin Galactic.

2 thoughts on “Berkshire Hathaway – is it worth an investment?”
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