Usually, I like a dividend, regardless of its size, simply because it proves to me that you have a management team that is focused on shareholders. There are a few other exceptions out there, but BRK.B stock (the lower-priced B shares) has delivered for so long now, and its CEO, Warren Buffett, is such a well-known investor, that I have no doubts about the philosophy or direction of the company.
Now, that’s not to say that BRK.B stock doesn’t fall in and out of fashion in the markets. When growth is hot, many people criticize Berkshire for not being aggressive enough.
What You Need to Know About BRK.B Stock
One classic contrarian indicator in the financial press is when you start to see stories questioning whether Buffett has lost his magic and whether that means the markets are about ripe for a correction.
And the safe money during the turmoil dutifully heads back to Berkshire Hathaway stock, like the swallows to Capistrano.
Technically, BRK.B stock is a holding company. But it’s more an insurance — and reinsurance — company that uses its massive amounts of cash to buy large, controlling interests in other companies it sees as good investments over five years or more.
BRK has two shares on the market. There’s BRK.A, which is the original Berkshire Hathaway stock. Its current share price is roughly $296,400. Obviously, it’s built for institutional investors as well as the 1% of the 1%.
In 1996, Berkshire decided to launch a secondary offering — BRK.B stock — that holds the same stocks in the same proportion as BRK.A, but at a lower price for individual investors.
At this point, Berkshire Hathaway has become Buffett’s de-facto mutual fund. He owns large shares in companies where he sees potential and often times owns enough that he has a say at the boardroom table.
Currently, he owns large positions in large financial institutions like Wells Fargo & Co (NYSE:WFC), Bank of America Corp (NYSE:BAC) and American Express Company (NYSE:AXP). He also has large positions in Apple Inc. (NASDAQ:AAPL) and The Coca-Cola Co (NYSE:KO).
Bottom Line on Berkshire Hathaway Stock
The point is, most of the companies behind BRK.B stock are blue chips. Some are at the top of their game, others have stumbled or aren’t firing on all cylinders. But Buffett’s value vision and patience have delivered over the decades.
And in times like these, Berkshire Hathaway stock is considered a good place to park money, but still leave it in stocks. It’s the best port in the storm.
What’s more, given all the issues regarding interest rates and inflation and a potential new path at the Federal Reserve, BRK’s insurance and reinsurance business, which holds tons of Treasuries, should make a killing on the bond side of the market.
For investors, that means you don’t have to decided between stocks and bonds. Just buy BRK.B stock and get both.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.