Is Berkshire Hathaway Stock a Millionaire Maker?

Reuben Gregg Brewer, The Motley Fool

Thu, May 8, 2025, 3:00 AM 5 min read

Key Points

Berkshire Hathaway has outperformed the S&P 500 index over the long term.
The giant conglomerate is doing it again so far in 2025.
It won't always outperform in every period, and there are big changes afoot.
10 stocks we like better than Berkshire Hathaway ›

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) entered 2025 with the wind at its back because of an astute shift the company made in 2024. That helped it outperform the S&P 500 (SNPINDEX: ^GSPC) this year as the index fell amid geopolitical and economic concerns.

Don't expect outperformance like this in every market period, but this giant conglomerate could still help make you a millionaire.

Berkshire Hathaway's strong start to 2025 began in 2024

Uncertainty is the driving force today in the stock market. That includes geopolitical tensions around a hard-line tariff push coming out of a new administration in Washington. The tariffs have created a secondary concern that the U.S. economy could fall into a recession: first-quarter gross domestic product (GDP) shrank slightly, largely because of a surge of imports before tariff implementations (imports tend to reduce GDP).

In uncertain times, investors often attempt to find safer companies to own. That usually includes sectors like utilities and consumer staples, which both have reliable demand characteristics.

But in 2025, the list of safe havens has included Berkshire Hathaway. The stock is up about 14% so far in 2025 versus a roughly 5% drop for the S&P 500.

A close up of Warren Buffett smiling. — Image source: Getty Images.

One key reason for Berkshire Hathaway's strength was the decision by Chief Executive Officer Warren Buffett and his team to raise cash in 2024. Last year, the company increased the amount of cash and short-term investments on the conglomerate's balance sheet by nearly 100% to more than $330 billion.

BRK.A Cash and Short Term Investments (Quarterly) Chart — BRK.A Cash and Short-Term Investments (Quarterly) data by YCharts.

Berkshire Hathaway is ready to reward patient investors

The big story here is that Buffett and his team made a conscious choice to raise cash by selling assets. Specifically, publicly traded stocks that the company owned.

That portfolio, where Berkshire only owns a portion of a publicly traded company's shares, is just one piece of its overall holdings. Berkshire Hathaway also owns another 189 businesses in their entirety, making them subsidiaries.

The total portfolio within Berkshire includes a large and diverse array of businesses. And that is the big story about it.

It isn't a typical company. The conglomerate is the investment vehicle of Buffett's team. The outperformance in 2025 is tied largely to an astute decision to raise capital in 2024 that has provided a cushion against market weakness and supplies the cash to buy stocks -- or entire companies -- that may have bargain prices (a recession and bear market could easily bring about such investment opportunities).

BRK.A Total Return Level Chart — BRK.A Total Return Level data by YCharts.

Buffett's investment approach does not include market timing, so the timing of the cash raise was likely more luck than anything else. In fact, Berkshire is so large that big moves usually require some time to execute.

It would be hard for Berkshire managers to time the market even if they wanted to. But what they can do quite well is buy good companies when they are cheap and then hold them over the long term to benefit from the growth of the businesses. And that is how Berkshire has managed to vastly outperform the market over the long term.

Berkshire Hathaway is well positioned

You can't expect Berkshire to outperform like it has so far in 2025 all the time. But if history is any guide, its investment approach has worked out very well over the long term. As long as that approach doesn't change, it could continue to make investors millionaires just as it has in the past. Just make sure you understand that benefiting from this long-term approach means taking a long-term approach with your investment in the company.

There is one caveat, however. Berkshire Hathaway is run by Buffett and his team. But Buffett has said that he will retire at the end of 2025, leaving the job of running Berkshire Hathaway to the team.

He has spent years training the people around him, so they are steeped in his investment approach. Nonetheless, it probably pays to keep a close eye on the transition if you buy Berkshire Hathaway.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.

Is Berkshire Hathaway Stock a Millionaire Maker? was originally published by The Motley Fool

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