Pros and Cons of Buying Berkshire Hathaway Inc.

Pros and Cons of Buying Berkshire Hathaway Inc. (BRK.B) Stock

Brian O’Connell | U.S. News & World Report

Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) stock is the Taj Mahal of company stocks, long known for its sky-high Class A share price and for its iconic — and refreshingly unassuming — chairman, president and CEO, Warren Buffett.

The Omaha, Nebraska-based company operates in the financial services sector (particularly insurance) and also operates in the freight transportation, real estate brokerage, energy, utility and diversified manufacturing sectors. The company, founded in 1889, boasts 377,000 employees, and many staffers are likely wondering what a post-Buffett Berkshire Hathaway would look like.

Buffett is still at the helm of Berkshire Hathaway, and seems as vibrant and on the ball as ever.

But the Oracle of Omaha is 87 years old and talk of a change at the of the company is on the rise. Buffett himself has acknowledged the need for new blood at Berkshire Hathaway, and has installed two senior portfolio managers, Ted Weschler and Todd Combs, to steer the investment management side of the company going forward.

Buffett is bullish on that move, calling the rise of both Weschler and Combs at Berkshire Hathaway “one of the best moves” the company has ever made. Together, they’ve built a broadly diversified investment portfolio stocked full of dozens of subsidiary companies across myriad industries, and stock holdings in over 40 companies — all under the sturdy roof of a single company.

Can the good times last at Berkshire Hathaway? Stock market experts seem to think so, but there may be some clouds on the horizon for the company.

“According to his recent shareholder letter, Berkshire owns roughly 17 percent of American Express (AXP), 7 percent of Bank of America (BAC) and 9.4 percent of Coca-Cola (KO),” says Sam G. Huszczo, a financial planner at SGH Wealth Management, in Detroit. “These are huge percentage ownerships in pillars of the American economy.”

It’s no secret why Berkshire Hathaway stock has performed so well for so long. “Berkshire has approximately $100 billion in unrealized gains,” Huszczo says. “Buffet is a long-term stockholder who can stomach volatility better than maybe any other investor before him.”