1 Reason Now Is a Great Time to Buy Berkshire Hathaway Stock

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) is making headlines today because longtime Chief Executive Officer Warren Buffett is handing off the reins to key lieutenant Greg Abel. This is a significant development, but it is unlikely to lead to substantial changes in the way the giant conglomerate is run. If you are looking at Berkshire Hathaway today, you should probably look past the CEO transition and focus on this one factor instead.

What is Berkshire Hathaway?

As noted, Berkshire Hathaway is a conglomerate. That simply means it is a company that owns a significant number of other companies. Most conglomerates operate in a handful of different industries with a small number of various subsidiary companies. At the end of 2024, Berkshire Hathaway owned 189 different companies under its corporate umbrella. That's a huge number.

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What's interesting about the 189 businesses, however, is that they span a huge range of different industries. Berkshire Hathaway has several large companies that it breaks out individually, including railroad, utility, and energy companies. However, it also owns companies in the retail, travel, chemicals, and manufacturing sectors. And even that's just a small sampling of what CEO Warren Buffett has created during his tenure.

The owned portfolio is just the start, too, because Berkshire Hathaway also owns a large portfolio of publicly traded stocks. Some of the biggest holdings include Chevron (NYSE: CVX), Coca-Cola (NYSE: KO), and American Express (NYSE: AMX). There are many more stocks in the mix, with Buffett explaining that he largely views the company's publicly traded stocks and its privately owned businesses in much the same way.

Which brings Buffett's investment approach to the fore. He likes to buy well-run businesses when they are attractively priced and then hold them for the long term to benefit from the growth of those businesses over time. What he doesn't do is micromanage the businesses, letting the companies operate fairly autonomously. In this way, Berkshire Hathaway is more like a mutual fund than a traditional corporation. You are, effectively, investing alongside Buffett.

Abel has a big leg up as he takes over

After the start of the new year, however, you will be investing alongside Greg Abel since he will be the CEO at that point. It is a notable change, but he has been training under Buffett for decades. And Buffett will be staying on as the chairman of the board of directors, so Abel will still report to Buffett. It is unlikely that Buffett will let Abel flounder without offering some assistance.

The one reason now is a great time to consider buying Berkshire Hathaway is because Abel is taking over with a huge safety net. At the end of the third quarter of 2025, the company's balance sheet had more than $380 billion in cash and equivalents on it. To put that into perspective, the median market cap of the S&P 500 index (SNPINDEX: ^GSPC) is about $400 billion. A median represents the middle value of a list, with half of the group above and half below that value. Berkshire Hathaway's cash hoard is shockingly large.

There are two benefits to having so much cash. First, when the next bear market arrives, Berkshire Hathaway as a business will have the cash it needs to come through the downturn in relative stride. Second, Abel will likely have sufficient cash on hand to start acquiring companies and publicly traded stocks during the bear market, as investors indiscriminately sell assets.

Sure, Abel will have big shoes to fill, but Buffett is leaving him with a very large gift, so he will get off to a good start. And if you have been considering adding Berkshire Hathaway to your portfolio, the company's substantial cash reserves are a compelling reason to buy the stock today.

Is there ever a bad time to hire a good money manager?

Ultimately, the unique nature of Berkshire Hathaway alters the investment equation. You shouldn't view it as a company so much as hiring Buffett and Abel to manage money on your behalf. There's really never a bad time to hire a good money manager.

The transition to Abel is a wildcard for sure, but with Buffett still around and the enormous cash stockpile at Abel's disposal, there's no big reason to avoid adding Berkshire to your portfolio today. In fact, it could even turn out to be a great time to buy the stock, especially if you are concerned about the odds of an impending bear market.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Chevron. The Motley Fool has a disclosure policy.