3 Reasons to Buy Berkshire Hathaway Stock Like There's No Tomorrow

Relatively few investors will buy Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) class A shares as 2024 draws to a close. There's a good reason why: The cost of one class A share of Berkshire Hathaway tops $715,000.

But you won't even need $500 to scoop up a Berkshire Hathaway class B share. And it could be an exceptionally smart move if you're a long-term investor. Here are three reasons to buy Berkshire Hathaway stock like there's no tomorrow.

1. Warren Buffett

I don't usually subscribe to the idea of "betting on the jockey not the horse." However, I'll readily acknowledge that Berkshire Hathaway chairman and CEO Warren Buffett is no ordinary jockey.

It's no exaggeration to say that Buffett ranks as one of the greatest investors of all time. Consider that between 1964 when he took control of Berkshire and 2023, the stock delivered an overall gain of 4,384,748%. That's more than 140 times the gain of the S&P 500 during the period. This outperformance has continued in 2024, with Berkshire once again soaring more than the S&P.

As impressive as Buffett's past performance has been, though, his overall philosophy is an even more important factor behind Berkshire's long-term success. Buffett's annual letters to Berkshire Hathaway shareholders are a master class in how to think about managing a business and investing in businesses.

The sad day will inevitably come when Buffett won't be around to run Berkshire Hathaway. However, his influence on the company will remain -- and I believe help ensure continued success -- for a long time to come.

2. Businesses built for the long run

The good news with Berkshire Hathaway is that you don't have to only bet on the jockey; the horse is really good, too. In Berkshire's case, you actually get a stable of horses.

Berkshire Hathaway itself includes nearly 70 subsidiaries. Some are huge contributors to the conglomerate's total revenue, such as railroad operator BNSF, insurer Geico, and energy company Berkshire Hathaway Energy. Others are smaller fish in the pond, including Helzberg Diamonds and See's Candies. But they all share at least one thing in common: They're built for the long run.

You'll also become an investor in nearly 40 other publicly traded companies when you buy shares of Berkshire. Most of the conglomerate's equity holdings are also exceptional businesses, especially top positions such as Apple, American Express, Bank of America, and The Coca-Cola Company.

3. A massive cash stockpile

I'd rarely include a company's cash stockpile as a top reason to buy its shares. But Berkshire Hathaway is a unique case. It has a whopping $325.2 billion in cash, cash equivalents, and short-term investments in U.S. Treasury bills. That's the biggest cash position in Berkshire's history.

BRK.B Cash and Short Term Investments (Quarterly) data by YCharts

Why is Berkshire's hefty cash stockpile a reason to buy the stock? It gives Buffett and his team ample resources to put to work if and when the stock market pulls back enough to create excellent buying opportunities.

Buffett's strategy is to invest only when valuations are attractive relative to earnings growth over a minimum of five years. This approach has been critical for Berkshire in achieving market-beating returns over the long run. I expect Buffett and his investment managers to use the massive cash stockpile to eventually make smart investments that help Berkshire continue to beat the market in the coming years.

The main reason not to buy Berkshire Hathaway stock

There is one main reason why you might not want to buy the stock right now: valuation. Berkshire's shares trade at 24.6 times forward earnings.

Even Buffett decided against stock buybacks in the third quarter of 2024. That's unusual for the legendary investor. His reluctance to repurchase shares could be due to Berkshire's premium valuation.

Some might want to wait until Berkshire's valuation is more attractive to buy the stock. However, I think Berkshire Hathaway remains an excellent pick for long-term investors.

Should you invest $1,000 in Berkshire Hathaway right now?

Before you buy stock in Berkshire Hathaway, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Berkshire Hathaway wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $849,539!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of December 2, 2024

Bank of America is an advertising partner of Motley Fool Money. American Express is an advertising partner of Motley Fool Money. Keith Speights has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Bank of America, and Berkshire Hathaway. The Motley Fool has a disclosure policy.