Investing in Berkshire Hathaway Stock Today for a Lifetime Financial Gain?
Berkshire Hathaway, the multinational conglomerate built over six decades by Warren Buffett and the late Charlie Munger, is poised for a significant change as Buffett is set to step down as CEO at the end of this year [1]. His successor, Greg Abel, has been preparing for this role since joining Berkshire in the late 1990s [2].
Berkshire Hathaway's diverse business model is a key strength, with interests spanning insurance (GEICO, Berkshire Hathaway Reinsurance), railroads (BNSF), energy (Berkshire Hathaway Energy), manufacturing (Precision Castparts), and consumer brands (Duracell, Fruit of the Loom) [1]. This wide diversification reduces exposure to sector-specific downturns and creates operational synergies.
One of Berkshire's most profitable segments is its insurance business. Last year, the underwriting business generated $9 billion in earnings, while insurance investment income contributed $13.7 billion [3]. The insurance business generates income through upfront premium collections and later claim payouts, creating a "float" for investment.
Investing in Berkshire Hathaway is akin to investing in a diversified portfolio of stocks, given its extensive holdings of privately held businesses across various industries. The conglomerate's portfolio includes significant investments in companies like Coca-Cola and American Express, as well as consumer goods brands like Dairy Queen, See's Candies, Duracell, and Fruit of the Loom [3].
Todd Combs and Ted Weschler, who joined Berkshire as investment managers in 2010 and 2012, respectively, will assume a more significant role in managing Berkshire's extensive portfolio. They were instrumental in getting Berkshire Hathaway to invest in Apple in 2016, which has since become one of the conglomerate's best-performing stocks over the past decade [4].
As of mid-2025, Berkshire is trading at historically low price-to-earnings (around 13) and price-to-book multiples (~1.35), suggesting potential undervaluation relative to its robust fundamentals and cash flow generation [3]. However, key risks include leadership transition and macroeconomic uncertainties.
Warren Buffett's legacy will undoubtedly be a significant factor in maintaining the long-term investment philosophy and culture established by Buffett and Munger. Greg Abel's success at Berkshire Hathaway will depend on his ability to maintain this philosophy [2].
Investors should ensure they aren't too reliant on any single stock, including Berkshire Hathaway, to build their wealth and should develop the habit of consistently investing in high-quality companies as part of a diversified approach to building wealth over time [5]. Assessing fit with your investment horizon, risk tolerance, and belief in Berkshire’s ongoing strategy are essential in deciding to invest.
[1] Berkshire Hathaway Annual Report 2024 [2] CNBC, "Greg Abel named successor to Warren Buffett as Berkshire Hathaway CEO," 2020 [3] Yahoo Finance, "Berkshire Hathaway Inc. (BRK.A) Stock Price, News, Quote & History," 2025 [4] Bloomberg, "Berkshire Hathaway Trims Financial Holdings as Buffett Rethinks Strategy," 2023 [5] Investopedia, "Diversification," 2023
- Berkshire Hathaway's vast business model, with its focus on finance, money, and investing in various industries such as insurance, railroads, energy, manufacturing, and consumer brands, sets it apart as a unique investment opportunity.
- Greg Abel, Berkshire Hathaway's incoming CEO, has prepared for his role by managing several of the conglomerate's key segments, including the finance-related insurance business that generates significant earnings.
- For long-term wealth growth, investors should practice diversification, spreading their investments across high-quality companies like Berkshire Hathaway while considering their individual investment horizon, risk tolerance, and belief in the company's ongoing strategy.
