How to Buy Berkshire Hathaway Stock in 2020

Berkshire Hathaway (NYSE:BRK.B) is the company behind Warren Buffett’s legendary success. In addition to its presence in the stock market, Berkshire Hathaway’s business spans across sectors from insurance, utilities & energy to transportation, manufacturing and retail.

Warren Buffett’s investment acumen helped grow Berkshire from a near-bankrupt textile company into one of the largest companies in the US. Today, Berkshire Hathaway’s Class A stock trades at over $280,000 (up more than 3,800% since inception), and its more affordable class B stock trades around $190.

Thinking of buying Berkshire Hathaway stock today? This guide will walk you through how to choose the right broker, how to purchase shares, and the elements that make Berkshire an attractive investment opportunity!

3 Simple Steps to Buy Berkshire Hathaway Stock

Don’t have time to read this guide? Simply follow these 3 simple steps to buy Berkshire Hathaway stock now!

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Where To Buy Berkshire Hathaway Stock

 

How To Buy Berkshire Hathaway Stock Using eToro

Step 1: Search for Berkshire Hathaway (BRK.B) stock

Using eToro’s search function, look for Berkshire Hathaway or the “BRK.B” stock ticker.

You will see that the search bar also displays people: browing other traders is a key component of eToro’s social trading experience.

Step 2: Open the trading window

When you want to trade Berkshire Hathaway stock, click on the “Trade” button to open the trade window.

Make sure you are using your own money and not eToro’s free “Virtual” trading account (unless you simply want to paper trade!).

Step 3: Set up your order and trade

In the trading window, you will have to specify several items to buy or sell the stock:

1. Buy or Sell (note: buy orders without leverage are executed directly while other trades like short-selling are executed via CFDs.)
2. Number of shares or dollar amount
3. Order type (market or limit order)
4. Leverage
5. Special order types (stop-loss, take-profit)

Take a second to review the dollar amount, exposure and percentage of your equity that a given trade entails. If you trade via CFD, you will also see a summary of the daily rollover fees at the bottom.

Before opening a trade, make sure that you have done your own careful research, especially if you’re using leverage! When you are ready, select “Set Order” to open your position.

 

Company Background

Berkshire Hathaway is an American diversified conglomerate run by legendary investors Warren Buffett and Charlie Munger. It owns various franchises and invests in publicly-listed companies in the US.

Incorporated in Delaware, it is listed on the New York Stock Exchange and headquartered in Warren Buffett’s hometown of Omaha, Nebraska. At the time of writing, it employed over 390,000 people worldwide.

As a large conglomerate, Berkshire Hathaway’s operations are split into several segments:

1. Insurance & Reinsurance: through GEICO, Berkshire Hathaway Primary Group and Berkshire Hathaway Reinsurance Group, active in insurance and reinsurance of property, casualty, life, accidents and health risks
2. Railroad Transportation: through the Burlington Northern Santa Fe Railway Company, one of the largest railroad systems operators in North America
3. Utilities & Energy: through Berkshire Hathaway Energy, which generates, transmits, stores, distributes & supplies energy throughout North America via a web of companies
4. Manufacturing: through a myriad of companies in the industrial, building and consumer products sectors
   • Industrial: mainly via Precision Castparts (metal components manufacturer for critical energy & aerospace projects), Lubrizol (specialty chemical manufacturer), IMC (one of the world’s largest manufacturers of precision metal cutting tools) and Marmon Holdings (diversified conglomerate in the autonomous manufacturing & services sector)
   • Building: through Clayton Homes (vertically integrated housing company), Shaw Industries (carpet manufacturer), Johns Manville (insulation products manufacturer), MiTek Industries (engineering & services provider to the construction industry), Benjamin Moore (paints & coatings manufacturer) and Acme Brick (brick & concrete blocks maker)
   • Consumer: through apparel companies (Fruit of the Loom, Garan and BH Shoe), Duracell (batteries maker), Forest River (RVs & trailers manufacturer) and various others
5. Service & Retailing: through food and food service companies (McLane, Dairy Queen, See’s Candies), aviation training & services (FlightSafety International, NetJets), electronics distribution (TTI), car dealerships (Berkshire Hathaway Automotive), home furnishing (Nebraska Furniture, Jordan’s), jewelry (Borsheim) and various other companies
6. Real Estate Brokerage: via HomeServices of America, the largest residential real estate brokerage firm in the US

In 2019, Berkshire Hathaway’s vast empire generated over $250 billion in revenues (+3% year-on-year) and over $70 billion in capital gains from its investments in the financial markets.

At the time of writing, Berkshire had a market capitalisation of $455 billion.

 

Berkshire Hathaway Stock Performance

Berkshire Hathaway has two stocks listed in the NYSE: Class A stock (BRK.A) and Class B (BRK.B).

Class A stock is the oldest and was priced at around $280,000 at the time of writing. This stock is extremely expensive to encourage only long-term investors to hold it.

Class B stock, on the other hand, is economically equivalent to 1/1500th of Class A stock (in terms of dividends & voting rights), and traded around $190 at the time of writing. While both stocks track the performance of the same company, they may not always trade at a 1/1500 ratio due to the lower liquidity of Class A stock.

As a result of the coronavirus crisis, Class B stock has lost 16.5% since the beginning of 2020. Despite this slide, the stock is still up 33% from 5 years ago, and almost 700% since inception.

At the time of writing, the analyst consensus was equally split between “Buy” and “Hold”, with next 12 months price targets between $207 and $239 (median of $221).

 

Why Invest in Berkshire Hathaway?

As one of America’s largest companies, Berkshire Hathaway has been incredibly successful and is the source of Warren Buffett’s immense wealth. Its franchises span dozens of industries, generate over $250 billion in revenues, and a large part of the company’s value comes from capital gains in Warren Buffett’s investments.

Deciding which stocks to invest is a personal decision that must be based on personal research. However, to help you in the process, we highlight below 5 aspects that make Berkshire Hathaway an attractive stock to buy:

1. Strong & profitable track record

Berkshire Hathaway’s $250 billion revenues in 2019 have grown at an average rate of 5% since 2015, while its net profits ($81 billion in 2019) have grown at a stunning ~28% per year over the same period.

A large part of this growth is due to increasing capital gains on Berkshire’s investments (large holdings in Coca Cola, Apple, American Express, Bank of America and Wells Fargo).

Nonetheless, all of Berkshire’s operating divisions have posted very strong top- and bottom-line performances over the past 5 years.

2. A history of successful investments

Warren Buffett is probably the world’s most successful investor, with almost all of his wealth tied up in Berkshire Hathaway stock.

Thanks to the large premiums generated through its insurance division, Berkshire has invested in many of the world’s most iconic companies (Coca-Cola, Apple, American Express etc.) and been immensely rewarded for it.

Not all of Berkshire’s investments have been successful (e.g. Kraft Heinz or Occidental Petroleum), but Berkshire Hathaway has an incredible track record of creating wealth from investments.

Holding Berkshire stock, therefore, offers not only exposure to the performance of its great subsidiaries, but also to its highly successful investment portfolio.

3. Unparalleled leadership

Warren Buffett (Chairman & CEO) and Charlie Munger (Vice Chairman) have been at the helm of Berkshire Hathaway since the 1970s. Under their watch, Berkshire changed from a near-bankrupt textile manufacturer into a gigantic conglomerate and one of the world’s most successful investment companies.

While Buffett and Munger are in their 90s, they remain entirely focused on the business and have been preparing a succession plan for several years. Still today, a bet on Berkshire is a bet on Warren Buffett, one of the most successful investors of all time.

4. Strong cash flows and massive cash pile for acquisitions

In 2019, Berkshire Hathaway generated a net $34 billion in cash through its operating, investing and financing activities, with $39 billion in operating cash flows (~16% of revenues).

Berkshire Hathaway generates so much cash that there simply aren’t enough good opportunities to deploy it. At the end of 2019, the company sat on a gigantic cash pile of over $120 billion.

As the coronavirus-induced crisis hits the global economy, once-overvalued investment opportunities become cheaper. With so much cash on hand, an investor of Buffett’s caliber may be able to add even more high-quality business to his empire in the next few years.

5. Significant diversification

Last, the size and scope of Berkshire Hathaway are such that holding the stock offers significant diversification for the investor, albeit at a possible discount to net asset value.

Buying Berkshire Hathaway stock offers exposure not only to a panel of high-quality companies in different industries but also to Warren Buffett’s personal investment portfolio.

 

Should I Buy Berkshire Hathaway Stock?

As discussed in this guide, buying Berkshire Hathaway stock is both an investment in a set of great companies and in Warren Buffett’s personal portfolio. Consequently, investors may find the proposition quite attractive.

However, we cannot give you specific investment advice and the decision to invest is ultimately your own. Before investing in any stock, we highly recommend reading the company’s SEC filings, reviewing its press coverage and understanding its business and risks to ensure you make an informed decision.

Investing can be tough and time-consuming but it can be incredibly rewarding. For more resources, make sure to check out our stock investing and stock trading guides!

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