Berkshire Hathaway Stock: FY24 Insights on Cash and Ownership Strategy

Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) has shown impressive performance in the past year, surpassing the S&P 500 by approximately 9% in total returns. This outperformance can be attributed to several critical factors, primarily its exposure to private equity, the strong cash positions it maintains, and the expert leadership of Warren Buffett.

One of the key highlights from the FY24 letter is Berkshire's substantial cash reserve, which stands as a security blanket for the company. With operating earnings reaching $47.4 billion, Berkshire has demonstrated a strong reliance on its private equity investments, along with retained earnings. This approach highlights a strategic prioritization of long-term capital compounding over distributing dividends to shareholders.

Despite a noted reduction in marketable equity, the firm’s ability to maintain and grow its operating earnings signals resilience and a solid strategy moving forward. Critics have pointed out that both BRK.A and BRK.B stock classes are roughly 20% overvalued, yet the consistency of Berkshire's price-to-book ratio—when coupled with Buffett’s disciplined approach to capital allocation—suggests the stock remains a prudent long-term hold.

Overall, Berkshire Hathaway continues to adapt and thrive, focusing on increasing intrinsic value through strategic ownership and cash management. These factors, along with Buffett’s unique expertise, position the company favorably for future growth and sustainability in a competitive market.

Berkshire, Stock, Cash