How To Buy Berkshire Hathaway Stock
One way to buy Berkshire Hathaway stock is to open an online brokerage account and use it to purchase the shares you want. This can be a fairly simple and straightforward process that may vary slightly based on what brokerage you decide to use. The general steps to buying Berkshire Hathaway stock with a brokerage account are:
how to buy berkshire hathaway stock
In the 1990s, when shares were priced at a comparatively paltry $30,000 or so, Warren Buffett opted to create a second class of shares rather than do a stock split to create more shares and lower the price of entry to Berkshire Hathaway ownership.
With dollar-cost averaging, investors add a set amount of money to their position over time, and that really helps when a stock declines, allowing them to purchase more shares. High-flying stocks can dip from time-to-time, so the strategy can help you achieve a lower buy price and higher overall profits.
In 1962 Buffett had built a stake in what was then a failing textiles firm, but agreed to sell his stock back to owner Seabury Stanton at $11.50 per share. But when Buffett received the offer letter from Berkshire, the price had changed to $11 3/8.
You may not have stock in your own lucrative company to trade, but you do likely have a core portfolio of low-cost, well-diversified funds. Diverting a major portion of your assets from your core investments to take a chance on an unknown quantity can be a dangerous move, investing pros say.
But even attentive investors can find it difficult to sell struggling stocks they once liked. A cognitive bias known as "anchoring" is one that just about every investor struggles with, says Scott Nations, president of investment volatility analytics firm NationsShares and author of "The Anxious Investor."
Warren Buffett is widely regarded as one of the greatest investors of all time. One way to share in his success is to invest in his firm, Berkshire Hathaway (BRKB). But is Berkshire a good buy for you now? Let's take a close look at the fundamental and technical performance of the ultimate Warren Buffett stock.
But the definition of a Warren Buffett stock has evolved in recent years. Under investment managers Todd Combs and Ted Weschler, Berkshire Hathaway has been increasingly sinking money into tech. It's taken large positions in established giants like Apple (AAPL), as well as younger companies like Brazilian payments company StoneCo (STNE) and young software firm Snowflake (SNOW). Berkshire has also snapped up a stake in Amazon.com (AMZN).
In Q4, Berkshire Hathaway sold a large part of its big stake in Taiwan Semiconductor (TSM), the world's largest contract chipmaker. It is a big supplier to Apple (AAPL), his firm's top holding. Berkshire sold 86% of its TSM stock after buying 60 million shares for more than $4.1 billion in the preceding quarter.
Amid recent volatility, Berkshire bought another 5.99 million shares between Sept. 26 and 28, according to a Sept. 28 filing. The firm held steady on the stock during the most recent quarter, with its 278 million shares representing a 28% stake in the company. .
The relative strength line is trying to firm up after slipping from a 52-week high. This gauges a stock's performance compared to the broader S&P 500. Its Relative Strength Rating of 52 means it has outperformed 52% of stocks in terms of price performance over the past 12 months.
Before that, BRKB stock at best moved with the market for a decade. An investor could have bought an index fund or ETF like the SPDR S&P 500 ETF (SPY), and generated similar or higher returns with less stock-specific risk.
Having such a large supply of cash protects the Warren Buffett stock during tough times. It also means Berkshire Hathaway is able to deploy capital when desirable businesses become available for purchase.
The most obvious difference between Berkshire Hathaway's A class and B class shares is the price. While at just under 300 per share, BRKB stock may be considered relatively expensive, BRKA stock is the most expensive on the market, currently trading around $424,500 per share.
Warren Buffett decided to introduce the BRKB shares to allow investors to purchase stock directly. Big demand for Berkshire Hathaway stock forced less-moneyed players to plow cash into unit trusts or mutual funds that mirrored his company's holdings.
Bottom line: Berkshire Hathaway stock is worth watching closely by those keen to add the ultimate Warren Buffett to their portfolio. It is a candidate to add to one's watchlist as it stalks a new entry point. Investors looking for true market leaders should also check out IBD Stock Lists, including the IBD 50 list of top-performing stocks.
Since the start of the last bull market (early 2009, when the Great Recession was still wreaking havoc on the economy), Berkshire Hathaway stock hasn't exactly been a huge market-beating investment. On the contrary, Buffett and vice-chair Charlie Munger have been content to sit on their portfolio of wholly owned businesses and publicly traded stocks. Big, splashy acquisitions have been few and far between as high-growth technology stocks dominated the 2010s.
But value investing like Buffett and Munger are known for has come back into style this year, and Berkshire's previously out-of-favor businesses (insurance, banks, infrastructure, and energy) have done well in 2022. Thus the stock's outperformance.
But Berkshire shares are notoriously difficult to stick a value on. For one thing, the portfolio of wholly owned businesses is large and extensive (GEICO insurance and the BNSF railroad, for example). Then add to that the four dozen or so stocks Berkshire and subsidiaries hold, which together are worth upward of $350 billion. That makes using traditional metrics to value Berkshire stock almost useless. For example, the stock's current price-to-earnings (P/E) ratio is 55, but earlier in the year, it was less than 10.
Granted, as you can see from the chart above, even when trading at 1.5 times P/B, Berkshire stock tended to keep rising. But those returns didn't make it a market-beating investment. Thus, this metric can actually provide a clue as to how good a buy Berkshire Hathaway stock is right now.
Historically, when P/B is near or below 1, Buffett and Munger have deployed lots of cash to repurchase Berkshire shares. This is what occurred in 2020 and 2021. In the 2021 annual update, Buffett and Munger used $51.7 billion to purchase and retire Berkshire stock.
But things have changed a bit in 2022. Share repurchases continue, but at a much slower pace: just $5.25 billion through the first nine months of 2022. The top team at Berkshire has instead shifted its attention to other stocks.
This year, Berkshire Hathaway began shopping the stock market in earnest again. Early in 2022, it was announced that reinsurance specialist Alleghany was being acquired for $11.6 billion. And Buffett has been busy adding other stocks to the portfolio of non-subsidiaries. In total, Berkshire Hathaway has purchased over $66.2 billion in equity securities (and sold $17.3 billion, for a total net purchase of $48.9 billion).
What has the top team at Berkshire Hathaway been buying instead of its own stock in 2022? More Apple (AAPL 0.88%), which now accounts for some 40% of the Berkshire stock portfolio. Top Apple chip supplier Taiwan Semiconductor Manufacturing (TSM -0.40%) was also a recent addition. Oil stocks have ranked high on the buy list, with Chevron (CVX 1.27%) and Occidental Petroleum (OXY 0.36%) together now accounting for nearly 13% of Buffett's equity holdings. And a number of banking and financial services companies have also factored prominently into the stock purchases this year.
Berkshire Hathaway is a wonderful company to own, akin to having an exchange-traded fund on the portfolio of the world's greatest value investor. But is it a best-buy now at the end of 2022? Based on Buffett's own purchase activity, I'd say no. After a brutal year in the stock market, there are deals to be had out there, especially among high-quality tech stocks.
For more than two years, Berkshire Hathaway has repurchased $40 billion of its common stock, a plan that remains in place until 2025. This is good for investors because it lowers the number of free-floating stocks. Fewer shares on the market means the stock price may increase.
This chart is not advice or a guarantee of success. Rather, it gauges the real-time recommendations of three popular technical indicators: moving averages, oscillators and pivots. Finder is not responsible for how your stock performs.
Valuing Berkshire Hathaway stock is incredibly difficult, and any metric has to be viewed as part of a bigger picture of Berkshire Hathaway's overall performance. However, analysts commonly use some key metrics to help gauge the value of a stock.
If you follow Warren Buffett and his conglomerate Berkshire Hathaway (BRK.A -0.12%) (BRK.B -0.12%), then what I'm about to tell you is probably obvious. But if you are new to this stock, it may surprise you to learn that there are two different types of Berkshire Hathaway stock: Class A and Class B.
Class A shares refer to the original Berkshire stock, which has been publicly traded since 1965 and is much more expensive than Class B shares. Berkshire issued Class B shares in 1996 to make Berkshire's stock more accessible to smaller investors.
Furthermore, Buffett declared that Class A shareholders will never have to go through any kind of stock split. Meanwhile, Class B shareholders can endure stock splits and did a 50-for-1 stock split in 2010 to make the shares even cheaper. Another difference is that Class A shareholders can convert their shares into an equivalent amount of Class B shares. However, Class B shareholders cannot do the same and would need to sell their shares and then purchase Class A.
In terms of performance, let's go back to the introduction of Class B shares on May 6, 1996, and see how they stack up to Class A since that time. The calculation for Class A is fairly straightforward because there was no stock split and Class A shares made total gains of 1,090% since 1996. 041b061a72