Thursday was a major down day in the broader indexes, with the Nasdaq Composite falling 2.8% and the S&P 500 slipping 1.6% in response to a widespread sell-off in mega-cap growth stocks like Nvidia. But Warren Buffett-led Berkshire Hathaway (BRK.A -0.61%) (BRK.B -0.47%) gained 1.7% on the session and then reached an all-time high on Friday.
In addition to outperforming the S&P 500 so far in 2025, Berkshire had a higher total return than the S&P 500 in 2024. Berkshire's epic run has sent the price of Berkshire A shares past $750,000 and Berkshire B shares over $500 a share.
Here's a look at why Berkshire offers two kinds of shares, why Berkshire B shares had a stock split in 2010, what another stock split could mean for investors, what makes up Berkshire's $1.11 trillion market capitalization, and whether Berkshire is a value stock worth buying now.
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Berkshire has made purposeful adjustments to its stock before
Berkshire launched its Class B shares in 1996 to help lower the barrier to entry for investors with smaller amounts of money and to prevent mutual funds from buying A shares and dividing them into smaller pieces. In other words, it allowed individual investors with long-term time horizons an easier way to participate in Berkshire's success, especially considering the B shares had just a 1.5% commission -- which was dirt cheap at the time.
In 2010, Berkshire issued a 50-for-1 stock split on B shares to help structure its purchase of BNSF railroad. Oftentimes, companies will split their stock to make a full share more accessible to investors. But many brokerages now offer fractional share purchases, which allow investors to decide the dollar amount they want of a stock regardless of the share price.
Currently, 1,500 Berkshire B shares equal one Class A share. If Berkshire did issue, say, a 3-for-1 stock split, that number would jump up to 4,500. Stock splits may impact the price per share, but they don't change the market value of a company. Its market capitalization is still just the stock price multiplied by the number of outstanding shares.
So instead of speculating on if Berkshire should split its stock or not, it's better to focus on the underlying business and whether it's worth buying and holding.
NYSE: BRK.B
Key Data Points
There's more than meets the eye
Berkshire has been a net seller of stocks for over two years now and didn't repurchase any Berkshire shares in the second half of 2024. Berkshire's position in cash, cash equivalents, and short-term investments has swelled to a record $334.2 billion. Berkshire's cash stockpile makes it a good investment for folks concerned about stock valuations. If there is a major sell-off or economic downturn, Berkshire will be in the catbird seat -- able to scoop up positions in distressed assets or companies at lower valuations.
Many of Berkshire's top public equity holdings are Dow Jones Industrial Average stocks. These companies may see their stock prices fall during a sell-off, but many of them also have the balance sheets and business models needed to endure a prolonged slowdown. For example, Chevron, which operates in the cyclical oil and gas industry, has very little debt on its balance sheet and 38 consecutive years of dividend raises. So in general, Berkshire is invested in fairly safe stocks.
Berkshire's property and casualty (P&C) insurance businesses -- which are arguably the most valuable aspect of the company -- are highly effective ways to compound value over time. P&C insurance embodies the qualities Buffett looks for in a company. Premiums are paid up front, known as the "float," which can be invested and pulled from as needed to pay claims.
Managing risk is a key element of P&C insurance. Buffett has long praised Berkshire's Vice President of Insurance Operations, Ajit Jain, for being one of the best decisions Berkshire has ever made due to Jain's risk management prowess and handling of the insurance businesses. To quote Buffett's 2024 annual letter to shareholders:
Our experience is that a single winning decision can make a breathtaking difference over time. (Think GEICO as a business decision, Ajit Jain as a managerial decision, and my luck in finding Charlie Munger as a one-of-a-kind partner, personal advisor, and steadfast friend.) Mistakes fade away; winners can forever blossom.
Berkshire Hathaway Energy (BHE) is another contributing aspect of the broader business, bringing in $3.74 billion in 2024 operating earnings. Berkshire purchased the remaining 8% of BHE last year, giving it full control of the utility giant. Here's a look at Berkshire's operating earnings by segment for 2023 and 2024. As you can see, the insurance business is massive.
|
Operating Earnings |
2024 (in billions) |
2023 (in billions) |
|---|---|---|
|
Insurance underwriting |
$9.02 |
$5.43 |
|
Insurance investment income |
$13.67 |
$9.57 |
|
BNSF |
$5.03 |
$5.09 |
|
Berkshire Hathaway Energy |
$3.73 |
$2.33 |
|
Other controlled businesses |
$13.07 |
$13.36 |
|
Non-controlled businesses* |
$1.52 |
$1.75 |
|
Other** |
$1.4 |
($0.175) |
|
Total |
$47.44 |
$37.35 |
Data source: Berkshire Hathaway. *Includes certain businesses in which Berkshire had between a 20% and 50% ownership, such as Kraft Heinz, Occidental Petroleum, and Berkadia. ** Includes foreign currency exchange gains of approximately $1.1 billion in 2024 and approximately $211 million in 2023 produced by Berkshire Hathaway's usage of non-U.S. dollar-denominated debt.
In sum, Berkshire is a highly profitable, diversified business with exposure to several different end markets.
Berkshire remains a solid buy
Even at an all-time high, Berkshire is a foundational value stock worth buying and holding. Its cash position makes up around 31% of its market capitalization, while the public equity portfolio is around 27%, leaving the insurance businesses, BNSF railroad, BHE, and other controlled and non-controlled businesses representing about $456 billion or 42% of Berkshire's market value.
Based on 2024 operating earnings of $47.44 billion, the portfolio of Berkshire's valuation that isn't cash or its public equity holdings is only being valued at less than 10 times operating earnings -- which is dirt cheap. Even for a slow-growing business.
All told, Berkshire remains a top-tier value stock to consider now.
