Berkshire Hathaway: Silent Greatness Through the Changes of Time

Berkshire Hathaway is considered a popular haven for conservative long-term investors, primarily due to the leadership and strategies of Warren Buffett. His famous maxim, that stocks are best held 'forever,' is reflected in the company's composition, which includes a remarkable range of enduring insurance, railroad, utility, and consumer goods companies. A portfolio of numerous blue-chip stocks complements the broadly diversified company. In the past five years, Berkshire's stock has registered a remarkable increase of over 120%, compared to a 100% gain for the S&P 500. This raises the question of whether now is the right time to buy, sell, or hold Berkshire shares. It all started in 1965 when Buffett's investment fund took over the troubled textile manufacturer Berkshire Hathaway. Through comprehensive restructuring, including closing down the textile businesses and acquiring insurance and energy companies, Buffett laid the foundation for today's success. Notable brands in the portfolio today include GEICO, BNSF Railway, and Dairy Queen. Berkshire's financial backbone is characterized by 'operating earnings,' an adaptable measure that excludes market fluctuations. Despite global market challenges, Berkshire recorded steady growth in this metric from 2018 to 2023, with an annual growth rate of 7%. Just last year, operating earnings rose by 21%. The stock market values Berkshire at a market capitalization of 982 billion dollars, equivalent to 3.6 times its liquid assets and 3.1 times its investment portfolio. Amid declining interest rates, Berkshire reduced significant stakes, particularly in Apple and Bank of America. While there are also skeptical voices pointing to potential challenges if Buffett were to step down from leadership, Greg Abel is poised as the designated successor. However, investors might miss an opportunity if they exit now, as long-term positive developments are possible.