Warren Buffett stepped down as CEO of Berkshire Hathaway (BRK.A +0.56%) (BRK.B +0.87%) at the end of last year after an illustrious career. During his six-decade long stretch controlling the company and its capital allocation decisions, the conglomerate registered a jaw-dropping return of more than 5,000,000%. Early investors have crushed the S&P 500 index.
Berkshire today carries a gargantuan market capitalization of more than $1 trillion, and Greg Abel is now in the CEO role. Can buying shares of this business today set you up for life?
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Recent performance lags the benchmark
While the conglomerate's long-term return is phenomenal, the gains haven't been all that impressive in recent times. In the past decade, Berkshire shares have climbed 283% (as of Jan. 22). The S&P 500's total return of 337% is higher. This is a colossal entity, so naturally its ability to expand is more limited. It makes sense that the stock has underperformed the overall benchmark, given that it's somewhat of a proxy for the economy, but with much less exposure to the technology sector.
The challenge that Berkshire, Buffett, and now Abel have faced and will face is a growing cash hoard coupled with limited opportunities to deploy significant amounts of capital. It's hard to move the needle when the balance sheet had $382 billion in cash, cash equivalents, and short-term investments in U.S. Treasury bills as of Sept. 30. Higher valuations can also result in more patience when making capital allocation decisions, placing a drag on the stock's returns.
NYSE: BRK.B
Key Data Points
Berkshire is a defensive stock pick
Berkshire runs a diversified business with numerous segments. The company has a presence in insurance, railroads, energy, manufacturing, consumer products, retail, and services. These activities raked in $8.9 billion of net income in third-quarter 2025. With consistent profits and cash flow generation, these are low-risk operations.
Having exposure to a variety of end markets that are affected by many different variables introduces a natural buffer regardless of economic conditions. Based on its history of operating discipline and sound financial decisions, a trend that should continue without Buffett in the CEO seat, Berkshire is a defensive stock pick today. Owning the business will give investors peace of mind.
Plus, there's a $314 billion (as of Jan. 22) public equities portfolio that can't be overlooked. This can drive shareholder value if the right investing moves are made.
It's not a surprise that buying the stock isn't going to generate life-changing returns for your portfolio and set you up for life. But at a price-to-book ratio of 1.5, the valuation is inviting for investors who are looking to scoop up shares of Berkshire.
