10 Reasons Berkshire Hathaway Is the Best Stock You Can Buy

With the annual meeting from Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) now ten days away, here are ten reasons why it is the best stock you can buy.

10. Diversity
One of the best things about Berkshire Hathaway is the diverse range of its businesses. This includes its core insurance operations, but also its railroad, utilities and energy segments, as well as its finance and financial products.

A simple glance at the staggering $28 billion it earned before taxes last year reveals how diverse its business is:


Source: Company Investor Relations

9. Remarkable growth
Not only is the business itself diverse, but it has done an amazing job at growing revenue. A simple glance at the revenue over the last five years reveals an incredible increase:


Source: Company Investor Relations

A big reason behind this is its growth in asset base over the same time, but this means the growth is the result of effectively adding businesses which can deliver strong returns.

8. Billions unclaimed
Many know of Berkshire's major holdings (Wells Fargo, Coca-Cola, American Express and IBM), but fewer people know at the end of the year, Buffett had more than $58 billion in unrealized gains. This means there's nearly $60 billion that hasn't been reflected in a single income statement yet.

7. Attractive investments
While we're on the subject of the aforementioned investments, it must be noted how much Buffett owns of some of them:


Source: Company Investor Relations

6. Resounding returns
From 1964 to 2013, Berkshire Hathaway has grown its book value at an annualized return of 19.7%, versus 9.8% for the S&P 500 (SNPINDEX: ^GSPC  ) . The compounded nature of these returns means Berkshire Hathaway has delivered an astonishing total return of 693,518% over that time, versus 9,841% for the S&P 500. Talk about being a market-beater.

5. Attractive valuation
Buffett said in his recent letter to shareholders that when Berkshire's stock is trading at less than 120% of its book value, they will be "aggressive," in repurchasing shares. The current valuation shows Berkshire Hathaway is trading at 140% of its book value, trading just 15% higher than the value Buffett himself finds attractive. That is still very appealing. 

4. Curious potential
Buffett has long made known his desire to use his "elephant gun" to make a massive acquisition between $5 and $20 billion.

Berkshire has been aggressively expanding in recent years (its assets now stand at $485 billion versus $300 billion in 2009), but such growth has directly resulted in bottom and top line growth as well. As a result, another great acquisition is certainly appealing.

3. Strong farm system
We know, one day, Warren Buffett will not be at the helm of Berkshire Hathaway. Yet just as he has done a remarkable job at picking investments and running his company, so too has he exhibited an uncanny ability to select great managers to fill in his footsteps. In the most recent letter to shareholders he said:

In a year in which most equity managers found it impossible to outperform the S&P 500, both Todd Combs and Ted Weschler handily did so. Each now runs a portfolio exceeding $7 billion. They've earned it. I must again confess that their investments outperformed mine...Todd and Ted have also created significant value for you in several matters unrelated to their portfolio activities. Their contributions are just beginning: Both men have Berkshire blood in their veins.

If that's not reassuring to investors, nothing will be.

2. An open dialogue
One of the unquantifiable, but absolutely valuable, things about Berkshire Hathaway is its willingness to discuss results with its shareholders. Whether it's the annual letter, report, or shareholder meeting, there are little to no mysteries surrounding the company. It instead operates with the intention of truly informing its shareholders of both the successes and failures of its operations.

Although it will be different when Buffett isn't at the helm, this conversational atmosphere eases many concerns.

1. It's run by Buffett
Need I say more?

The greatest thing Warren Buffett ever said
Don't simply take my words for it, but instead take Buffett's. The reality is, Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Even if these 10 reasons aren't enough for you to buy Berkshire, consider Buffett's own wisdom surrounding his company and others. If fact, now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

Follow along as we countdown the days until Berkshire Hathaway's annual shareholder meeting in Omaha, Nebraska on May 3. A handful of Fools will be attending the event and live chatting with other Fools around the globe! Click HERE to set a reminder for yourself about the live chat!

The previous articles in our "12 Days of Berkshire" series:
12 Reasons Warren Buffett Is an Incredible Investor and How You Can Learn From Him

11 Things in Your House Making Warren Buffett Money


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 23, 2014, at 2:53 PM, KMack23 wrote:

    Big fan of Buffett's so just playing devil's advocate here but...

    Valuation is half the equation when deciding to purchase a stock. Buying when shares are trading at 140% of book value (which is roughly 15% higher than the price at which Buffett himself would "aggressively" repurchase shares) doesn't seem leave much room for a margin of safety. No?

  • Report this Comment On April 23, 2014, at 10:26 PM, classic216 wrote:

    Buffett has admitted that Berkshire has become too big to produce outsized returns like it did in the past. However, it may still be capable of outperforming the S & P 500. time will tell.

  • Report this Comment On April 24, 2014, at 9:22 AM, alan0101 wrote:

    Agree completely, except for point one. Sadly, WEB will not live for ever. When he goes, and may he and Charlie live another decade, shares will drop 20% and languish for a couple of years. Need to factor this hiccup into retirement planning..

  • Report this Comment On April 24, 2014, at 9:41 AM, mapbc wrote:

    Seems like TMF is putting out a new Warren Buffett article every few days. Are there no other investors we can learn from? Seems like overkill.

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