Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) is up 17% year to date (YTD) at the time of this writing -- handily crushing an 8.3% decline in the S&P 500(SNPINDEX: ^GSPC). Berkshire Hathaway has been on such a tear that it is one of the top 40 best-performing S&P 500 components in 2025.
Hovering around an all-time high, Berkshire's market cap is now $1.15 trillion -- making it the sixth-most valuable U.S. company behind Apple (NASDAQ: AAPL), Microsoft, Nvidia, Amazon, Alphabet, and Meta Platforms.
With Berkshire up around 50% in just the last three years, some investors may be concerned that the stock has run up too far, too fast. Here's an overview of the moving parts that make up Berkshire, and if the value stock is still worth buying now despite the meteoric surge.
Image source: Getty Images.
A three-headed dragon
In years past, Berkshire has referred to its four jewels, or its "big four": Apple, its property and casualty (P&C) insurance businesses, its ownership of BNSF railroad, and Berkshire Hathaway Energy (BHE), which generates, transmits, stores, distributes, and supplies energy at the cross-section of the energy and utility sectors.
However, Berkshire has sold around two-thirds of its Apple stake from peak levels and some other holdings to bolster its cash position.
Berkshire has also invested in expanding its P&C business under the leadership of Ajit Jain. Buffett has often referred to hiring Jain as one of the best decisions he's ever made.
Last year, Berkshire took full ownership of BHE by buying the remaining 8% stake.
The increase in cash and value of Berkshire's private business, paired with the decrease in size of its public equity portfolio, has shifted the balance of Berkshire's assets. Today, Berkshire resembles more of a three-headed dragon -- consisting of its $287.59 billion portfolio; $334.2 billion position in cash, cash equivalents, and short-term investments in marketable securities; and the rest of the business, which can be valued at $528.2 billion based on Berkshire's market cap.
So, while investors often focus on what stocks Berkshire owns, that part of the business isn't as important as it used to be.
Determining a fair price for Berkshire Hathaway
Using operating earnings is the best way to value Berkshire's other businesses.
"All told, we recorded operating earnings of $47.4 billion in 2024. We regularly -- endlessly, some readers may groan -- emphasize this measure rather than the (generally accepted accounting principles) GAAP-mandated earnings," wrote Buffett in the 2024 annual letter to Berkshire Hathaway shareholders.
Operating earnings better reflect the performance of Berkshire's business units rather than changes in the value of the stocks and bonds it owns.
2024 operating earnings of $47.44 billion were 27% higher than 2023. The insurance business made up 47.8% of operating earnings, and BNSF and BHE were 18.5%. Other controlled businesses outside these categories were 27.6%.
Berkshire owns dozens of businesses, such as Benjamin Moore paints, Duracell batteries, See's Candies, Fruit of the Loom, and more. These earnings are reflected in controlled businesses. The remaining 6.2% of operating earnings came from noncontrolled businesses in which Berkshire has between 20% and 50% ownership, like Kraft Heinz, Occidental Petroleum, and Berkadia -- as well as foreign currency exchange gains.
Again, Berkshire's market cap less its cash position and equity portfolio is $528.2 billion at the time of this writing --- or 11.1 times operating earnings. However, Berkshire does have a good amount of debt, mainly from the parent company, BSNF, and BHE. As of Dec. 31, 2024, consolidated borrowings were $124.8 billion.
Taking the $334.2 billion cash position and subtracting that figure would give Berkshire a net cash position of $209.4 billion. Arguably, the more accurate way to value Berkshire's controlled business is to take its market cap minus the net cash position and market value of its equity portfolio -- which would be 13.8 times operating earnings.
No matter how you slice it, Berkshire is still a reasonable price relative to the value of its controlled business.
Berkshire is betting on its best ideas
The reduction in emphasis on Berkshire's public equity portfolio and growth in operating earnings from controlled businesses reflects Berkshire's preference in asset management. To quote Buffett from the 2024 shareholder letter, "With marketable equities, it is easier to change course when I make a mistake... With controlled companies, we can dictate these decisions, but we have far less flexibility in the disposition of mistakes."
In other words, the liquidity of market securities in Berkshire's equity portfolio allows it to make fairly quick multibillion-dollar decisions (or in the case of Apple, hundreds of billions) if it no longer likes the stock's valuation, management, or if the investment thesis changed. By contrast, there's more pressure with controlled companies, but also arguably higher upside potential, since Berkshire calls the shots and isn't under the microscope of second-by-second changes in stock prices.
Looking at Berkshire Hathaway's price action may lead you to believe the stock is overvalued. But dig deeper, and it's clear that Berkshire is still a reasonably priced stock worth buying now.
Berkshire's recent success has less to do with its stock picking and more with the exceptional management and execution of its controlled businesses. Berkshire's large cash position makes it a safe haven for investors worried about economic uncertainty and market volatility. If top stocks fall to more attractive levels, Buffett and his team have the cash to pounce on a compelling opportunity.
All told, Berkshire remains an excellent value stock to buy now.
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 whenNetflixmade this list on December 17, 2004... if you invested $1,000 at the time of our recommendation,you’d have $461,558!* Or when Nvidiamade this list on April 15, 2005... if you invested $1,000 at the time of our recommendation,you’d have $578,035!*
Now, it’s worth notingStock Advisor’s total average return is730% — a market-crushing outperformance compared to147%for the S&P 500. Don’t miss out on the latest top 10 list, available when you joinStock Advisor.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Kraft Heinz and Occidental Petroleum and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
