Investing like a billionaire: Everything Berkshire Hathaway has to offer the average investor

With a market capitalization of $867.46 billion, Berkshire Hathaway (BRK.A) (BRK.B)A diversified holding company, is led by Warren Edward Buffett, one of the world’s most renowned investors with a long history of successful capital allocation and value creation. As of May 8, 2024, he Net worth: $133.5 billionHe became the 8th richest person in the world.

Buffett’s considerable wealth primarily comes from his significant stake in Berkshire Hathaway, a conglomerate with over $1 trillion in assets. Under Buffett’s expertise and outstanding leadership, Berkshire has historically achieved strong and consistent long-term growth, outperforming a variety of investment options.

From 1965, when Warren Buffett took control of the company, to 2023, Berkshire’s stock price was It soared by a whopping 4,384,748%., surpassing the S&P 500’s total return of 31,223% including dividends. Additionally, Berkshire continued its solid performance with double-digit growth through 2024.

Berkshire’s portfolio reflects Buffett’s investment strategy

Warren Buffett, known as the “Oracle of Omaha,” stands out as one of the greatest investors of all time. He follows Benjamin Graham School of Value Investment, finds securities with unreasonably low prices compared to their intrinsic value. He often evaluates a company’s long-term potential rather than short-term market trends.

Buffett considers company performance, profit margins, management, and business model. He believes that by investing in high-quality companies with solid competitive advantages, or “economic moats,” they can maintain or expand their market share over time.

Buffett’s holding company, Berkshire Hathaway, which adheres to his investment policy, aims to acquire ‘efficiently managed companies’ with a variety of characteristics, including sustained competitive advantage, at extremely low prices.

For example, the 1972 acquisition of See’s Candies demonstrated Buffett’s strategy. That’s because the company’s strong brand and loyal customer base make it a highly profitable long-term investment. He favors companies with strong brands and business models that own niche markets and create enormous barriers for competitors to enter and outcompete them.

Berkshire offers diversification across industries

Berkshire Hathaway’s top holdings are: Apple Inc. (AAPL). Thanks to its strong brand and customer loyalty, it has long remained one of Buffett’s favorite stocks. He previously called AAPL “the best company I know in the world.”

BRK.B recently revealed this. Apple reduces its stake by about 13% In the first quarter. Berkshire’s Apple bet is reportedly worth $135.4 billion, or nearly 790 million shares. Despite the trimmings, the iPhone maker remains Berkshire’s largest holding. 39.8% weight In publicly traded portfolios.

Another consumer goods company that Buffett likes is The Coca-Cola Company (KO). He recognized the company’s iconic brand, attractive dividend and market advantages. Coca-Cola’s strong brands have allowed the company to mitigate the impact of inflation by passing on higher costs to customers and still generating growth.

KO is the fourth-largest holding in Berkshire’s portfolio, at about 6.9%. Berkshire owns a 9.3% stake in the company.

Meanwhile, Warren Buffett has significant investments in the energy sector. During the fourth quarter of 2023, Buffett’s Berkshire increased its stakes in two major oil and gas companies. Chevron Corporation (CVX) and Occidental Oil Corporation (OXY).

Berkshire Hathaway owns about 6.7% of CVX. According to Berkshire’s February shareholder letterThe company also holds a 27.8% stake in OXY and has warrants to further increase its ownership at a fixed price.

Chevron (about 5.5% of the portfolio) and Occidental (4.5%) provide investors with exceptionally good returns during periods of inflation and pay attractive dividends.

Buffett also likes financial institutions and insurance companies, viewing them as strategic bets on the long-term health of the U.S. economy. Berkshire’s top two financial holdings are: Bank of America Corporation (BAC) and American Express Company (AXP). These financial stocks make up approximately 21% of Berkshire’s total portfolio weight.

Excellent first quarter operating profit and record cash reserves

for First quarter Berkshire’s total revenue for the year ended March 31, 2024 was $89.87 billion, a 5.3% increase over the prior year. Railroad, utility and energy revenues increased 11.2% year-over-year, while insurance and other revenues increased 3.2%.

The Warren Buffett-led conglomerate reported first-quarter operating profits of $11.22 billion, up 39% from a year ago, which includes revenue from businesses in which the company owns a wholly-owned share. This impressive surge was driven by underwriting revenue, which grew 185% year over year to $2.6 billion. Insurance investment also surged 32%, exceeding $2.5 billion.

However, net profit attributable to Berkshire Hathaway shareholders decreased 64.2% from the previous year to $12.7 billion.

During the first quarter, the company’s cash pile hit a record high of $188.99 billion, up from $167.6 billion in the fourth quarter.

“We have seen a significant improvement in revenue in our underwriting segment. And our investment income will almost certainly increase,” Buffett said. Berkshire’s Annual Shareholder Meeting in Omaha, Nebraska. “And the reason I said that in the annual report is that the returns are much higher than they were last year. And we hold a lot of fixed, short-term investments that are very sensitive to changes in interest rates.”

conclusion

Berkshire Hathaway, led by well-known investor Warren Buffett, follows an intrinsic value investment approach that aims to buy undervalued companies with solid fundamentals, competitive advantages, and long-term growth potential. Berkshire has a diverse portfolio of businesses including insurance, utilities, transportation, retail, and technology.

Moreover, Berkshire’s top five holdings pay attractive dividends, indicating that Warren Buffett is interested in stocks that provide a stable source of income.

Buffett’s conglomerate recently reported a significant surge in operating profits for the first quarter of fiscal 2024, driven by increased underwriting revenue and a record cash hoard of nearly $200 billion.

USB analyst Brian Meredith Maintain BUY investment opinion Berkshire cited recent performance improvements and noted that Geico plans to catch up with rival Progressive and others in data analytics by 2025.

Berkshire Hathaway has historically delivered impressive and consistent returns. From 1965 to 2023, stock prices soared 4,384,748%, more than 140 times the overall return of the S&P 500 including dividends. Moreover, Berkshire stock has already performed well this year. Each share class rose more than 12%, with the S&P up nearly 8%.

Shares of BRK.B are up about 16% over the past six months and more than 22% over the past year.

Analysts expect BRK.B’s EPS for the coming fiscal year (ending December 2024) to be $19.70, up 14.6% year-over-year. Additionally, the company’s fiscal 2025 EPS and revenue are expected to be $19.97 billion and $376.61 billion, up 1.4% and 5.6%, respectively, from the previous year.

Therefore, by owning BRK.B stock, investors gain exposure to Berkshire’s diverse business portfolio, Buffett’s expertise, and stable growth and performance.