Should You Buy Berkshire Hathaway While It's Below $550?

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Geoffrey Seiler, The Motley Fool

Sat, Mar 22, 2025, 11:05 AM 5 min read

While the banal marketplace has been selling disconnected recently, 1 banal that has bucked the inclination is Berkshire Hathaway (NYSE: BRK.B) (NYSE: BRK.A). Its shares are up much than 15% twelvemonth to day arsenic of this writing, and the banal is trading adjacent an all-time high.

Let's look astatine wherefore Berkshire has outperformed the marketplace and whether the banal is simply a bargain astatine existent levels.

One of the large reasons for Berkshire's beardown show successful the look of marketplace declines is the immense currency presumption it has built. The institution fundamentally acts arsenic the concern conveyance for its CEO and famed investor, Warren Buffett. Berkshire is simply a conglomerate that owns businesses successful a assortment of sectors, but Buffett is peculiarly fond of security companies, since helium gets entree to superior done their float.

Float is simply the wealth security companies cod from policyholders and clasp until a assertion is paid out. Most security companies instrumentality this currency and put it successful fixed-income instruments similar bonds to make income. However, Buffett has eschewed this emblematic security institution strategy successful favour of investing successful high-quality stocks.

It's a unsocial strategy successful the manufacture that has vaulted Berkshire to being of the largest companies successful the satellite by marketplace cap. However, implicit the past respective quarters, Buffett has been overmuch much funny successful selling stocks and compiling currency than successful investing. In fact, past twelvemonth helium lone purchased astir $9 cardinal worthy of banal portion selling much than $143 billion. This included importantly reducing positions successful his apical holdings, specified arsenic Apple and Bank of America.

Combined with the currency travel the institution generated for the year, this near Berkshire with a whopping $334 cardinal successful currency connected its equilibrium expanse astatine year-end. In the investing industry, this is known arsenic adust powder, which is fundamentally wealth connected the sidelines that tin beryllium utilized to marque investments. Berkshire has plentifulness of adust pulverization astatine the infinitesimal and 1 of the top worth investors of each clip astatine the helm to bargain stocks erstwhile helium feels the timing is right.

Now a elemental marketplace correction whitethorn not beryllium capable to get Buffett backmost to aggressively buying stocks. He started to propulsion backmost from stocks successful the archetypal fractional of 2024 and the large marketplace indexes similar the S&P 500 are inactive higher than they were astatine the extremity of June 2024. However, if immoderate idiosyncratic stocks go attractive, Buffett has a batch of currency to deploy.

Statues of a bull and a carnivore lasting connected a telephone displaying a banal chart.

Although this existent marketplace situation attracts investors to Berkshire's adust powder, that doesn't needfully marque the banal a bully bargain astatine existent levels. In summation to selling down banal positions implicit the past year, Buffett besides decided to halt buying backmost Berkshire stock.