Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) is a holding company run by investing legend Warren Buffett. He took control of the former textile manufacturer in 1965 and transformed it into one of the largest companies in the world.
Berkshire serves as his investment arm. Buffett uses the cash flows generated by Berkshire's operating businesses and investments to acquire other companies and make new investments that grow shareholder value.
NYSE: BRK.B
Key Data Points
Berkshire Hathaway differs from other investment firms, like hedge funds. Anyone can invest in Berkshire Hathaway if they have enough money to buy at least one Class B share (more than $450 in late 2024).
For comparison, hedge funds are open only to accredited investors, meaning those with a high income or net worth and who can meet the fund's minimum investment, which can be $1 million or more. Berkshire Hathaway also doesn't charge exorbitant fees to its investors because it sees them as partners, not clients.
Accredited Investor
Buffett's company has a tremendous track record of growing value for shareholders. From 1965 through 2023, Berkshire's shares delivered a 19.8% compound annual return.
That has outperformed the S&P 500 by almost 2-to-1 (the S&P 500 has produced a 10.2% compound annual return during that period). Here's a step-by-step guide on buying Berkshire Hathaway shares and some factors to consider before investing in the company.
How to buy Berkshire Hathaway stock
To buy shares of Berkshire Hathaway, you must have a brokerage account. If you still need to open one, here are some of the best-rated brokers and trading platforms and a step-by-step guide to buying Berkshire Hathaway stock using Fidelity's five-star-rated platform.
Fidelity makes it easy to buy stocks. Its website offers a video tutorial and a step-by-step guide. Here's a screenshot of how to place a stock trade with Fidelity.
On this page, fill in all the relevant information, including:
- The number of shares you want to buy or the amount you want to invest to purchase fractional shares.
- The stock ticker symbol (BRK.B for Berkshire Hathaway).
- Whether you want to place a limit order or a market order. The Motley Fool recommends using a market order since it guarantees you buy shares immediately at the market price right at that moment.
Once you complete the order page, submit your order and become a Berkshire Hathaway shareholder.
Reasons to invest in Berkshire
Here are some reasons to consider purchasing the company's stock:
- You believe Berkshire Hathaway can deliver a higher return than an S&P 500 index fund.
- You like Warren Buffett's investment style and want to trust him and his team with your money.
- You don't need to earn dividend income.
- You believe Buffett and his team can put Berkshire's retained cash flows and cash balance to work in growing shareholder value over the long term.
- You understand how Berkshire Hathaway makes money and want to follow the company.
- You realize your investment in Berkshire Hathaway could lose money and might underperform the S&P 500.
Reasons not to invest in Berkshire
On the other hand, here are some factors to consider that might make you opt not to purchase shares of Berkshire Hathaway:
- You're worried about Warren Buffett's age and whether his eventual successors will follow his blueprint for growing shareholder value.
- You're concerned that the death of Buffett's long-time business partner, Charlie Munger, might affect the company's future performance.
- You're nearing or in retirement and need dividend income.
- You don't firmly believe Berkshire Hathaway can outperform the S&P 500 over the long term.
- You are a younger, more growth-oriented investor and don't like Buffett's value investing approach.
- You're too busy to follow Berkshire Hathaway and don't want to invest directly in individual stocks.
Is Berkshire Hathaway profitable?
Profit growth helps power stock price appreciation over the longer term. That makes it a good area for beginning investors to focus on before buying shares.
Berkshire Hathaway is a consistently profitable company. Its operating profit rose 15% to $11.6 billion in the second quarter of 2024. The company benefited from higher insurance underwriting profits and increased interest income on its large cash balance.
The company retains all its earnings to allocate toward growing shareholder value. It also holds a lot of cash on its balance sheet -- a record $277 billion at the end of 2024's second quarter -- that it intends to deploy when it finds compelling investment opportunities. Berkshire's cash position ballooned after it cut its stake in Apple by almost 50% in the second quarter, raising a staggering $77 billion in cash.
Does Berkshire Hathaway pay a dividend?
While Berkshire Hathaway is a very profitable company, it doesn't pay dividends to its shareholders. CEO Warren Buffett believes he and his team can create more value for shareholders by retaining that cash and allocating it toward initiatives that create shareholder value.
Dividend Payments
Those options include reinvesting it into existing businesses, making acquisitions, investing in publicly traded companies, or repurchasing shares when they trade at a discount to the company's estimated intrinsic value. The company bought back $345 million in stock during the second quarter of 2024, its lowest tally in years. It had repurchased $2.6 billion in the first quarter and $2.2 billion in the final period of 2023.
ETFs with exposure to Berkshire Hathaway
Instead of actively buying shares directly, you can passively invest in Berkshire Hathaway stock by investing in a fund holding its shares. Berkshire Hathaway is among the larger publicly traded companies by market capitalization, making it a widely held stock.
Berkshire is in several stock market indexes, including the S&P 500 index. As a result, index funds and exchange-traded funds (ETFs) that benchmark their returns against those indexes hold Berkshire Hathaway stock.
Exchange-Traded Fund (ETF)
Will Berkshire Hathaway stock split?
Berkshire Hathaway has never implemented a stock split for its Class A shares (BRK.A), which is one reason those shares traded at almost $700,000 apiece in late 2024. It will likely never split that class of its stock.
However, in response to unit investment trusts that were formed to allow small investors to invest in Berkshire stock (and to make its stock more accessible to more investors), Berkshire created Class B shares (BRK.B) in 1996 with a much lower price point. The company has only split that stock class once. It completed a 50-for-1 split in 2010. At the time of the split, shares were trading at around $3,500.
As of late 2024, Berkshire had not announced an upcoming stock split. With the Class B shares trading at more than $450 a share, it doesn't seem likely that Berkshire will split its stock anytime soon, given its historical trend.
Related investment topics
The bottom line on investing in Berkshire Hathaway stock
An investment in Berkshire Hathaway is one in Warren Buffett and his team. It's a wager that they can allocate the cash flows produced by Berkshire Hathaway's operating businesses and investments to create more value for shareholders.
They have done a phenomenal job growing value for investors over the years. While that past success is no guarantee of future returns, Berkshire Hathaway has the potential to be a solid long-term investment.
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About the Author
American Express is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Matt DiLallo has positions in Apple, Berkshire Hathaway, Chevron, and Coca-Cola and has the following options: short February 2025 $275 calls on Apple. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.
