Few companies meet the criteria of “forever” stocks – ones that continue to compound at a rate, on average, that beats the total return of the broader stock market over long periods of time. Berkshire Hathaway Inc. (NYSE:BRK.B) happens to be such a rarity.
The company is sitting on a pile of cash, and has continued to wait on the sidelines in terms of engaging in any acquisitions due to a self-proclaimed lack of ability to accurately forecast the long-term impact of the COVID-19 pandemic on various businesses and sectors Berkshire otherwise likes.
A cash hoard of around $230 billion U.S. is enough to warrant attention from any investor. Berkshire’s lack of willingness to invest these funds is also something investors ought to take notice of, and suggest trepidation about the future, from one of the most optimistic long-term investors, Warren Buffett.
I think the tendency for Berkshire’s stock to lag the broader stock indices in recent years is likely to reverse course shortly. The broad leadership of technology stocks will, at some point, have to give way to large blue-chip value stocks that will turn the corner coming out of this recession. When exactly this turning point will materialize is a whole other discussion, however.
Berkshire remains one of my top value picks investors ought to keep on their watch list now. When the company starts engaging in mega multi-billion-dollar acquisitions is precisely the time I’d suggest putting some dry powder to work. One of the most prudent value investors of all time, Warren Buffett, is a great investor to watch and follow, as is Berkshire’s stock.
Invest wisely, my friends.