This past New Year's holiday was significant in that it marked the formal transition in leadership at Berkshire Hathaway (BRK.B +1.32%) (BRK.A +1.47%) from longtime CEO Warren Buffett to his handpicked successor, Greg Abel.
The company's first earnings report under Greg Abel's leadership is just weeks away, and word, or rather regulatory filings, has already emerged that it plans to sell some or all of its stake in Kraft Heinz, which just never really worked out as an investment.
But rectifying a past mistake isn't the top reason that now could be a great time to invest in Berkshire Hathaway. Instead, look at the company's balance sheet.
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Buy Berkshire Hathaway for its $381 billion cash pile and its numerous benefits
As of the end of the third quarter, the company's total cash position sat at over $381 billion. Profits from various Berkshire Hathaway subsidiaries, as well as stock transactions during the fourth quarter, could push that to over $400 billion when the company closes out its 2025 fiscal year.
That massive cash pile represents several things to investors. It's a financial safety net in that it can protect Berkshire Hathaway from a severe recession or other crisis and could even compel management to begin paying shareholders a dividend. To be clear, that part is speculative, as Buffett famously opted against paying dividends.
NYSE: BRK.B
Key Data Points
The other feature of all that cash is the opportunity it presents for Greg Abel and management to opportunistically reshape Berkshire Hathaway's investment strategy in their vision. Nobody should complain about Buffett's track record, but the transition could open the door to some faster-growing technology investments in a world that increasingly relies on tech.
A wonderful company trading at a fair price once again
Regardless of which direction Greg Abel guides Berkshire Hathaway in, it remains a world-class company with a long record of success. Plus, Buffett is still the company's chairman, so he's not entirely out of the picture.
Meanwhile, Berkshire Hathaway stock now trades at 1.4 times its book value, slightly below its 10-year average.
Data by YCharts.
As the old saying goes, there's nothing wrong with buying a high-quality stock at a fair price. Investors may be wary as they feel out Greg Abel's grasp of his new job. That said, he spent years under Buffett's mentorship, so it seems reasonable to give him the benefit of the doubt.
Berkshire Hathaway's cash continues to sit and accumulate. That may be boring to some, but it could be a game-changer as the company's new leadership starts putting all that money to work for shareholders.
