To say that Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) has been a big winner for investors over the long term would be an understatement. Between 1964 and 2023, Berkshire's overall gain was a jaw-dropping 4,384,748% -- more than 140 times greater than the S&P 500's gain during the period. Berkshire has also outperformed the S&P 500 since the end of 2023.
There could be a reason to invest in the conglomerate led by Warren Buffett sooner rather than later. The question is: Should you buy Berkshire Hathaway stock before Jan. 30?
What's special about Jan. 30?
You might be wondering what's special about that date. No, Berkshire Hathaway isn't scheduled to report its latest quarterly results then. The company's next quarterly update will probably come in late February. Neither has Berkshire announced any other special event for this week.
However, another company will report its results for the first quarter of fiscal year 2025 on Jan. 30 -- Apple(NASDAQ: AAPL). And it could be one of Apple's more important updates in quite a while. Investors will be especially interested in learning how Apple Intelligence, the bundle of new generative AI features available with iOS 18, affected iPhone sales.
Why does Apple's quarterly update matter to Berkshire Hathaway? Even though Buffett has reduced his company's stake in the consumer technology giant in recent quarters, Apple remains by far the largest holding in Berkshire's portfolio. Berkshire is the sixth largest institutional shareholder, owning around 2% of Apple.
What history shows
Berkshire's position in Apple currently makes up roughly 6.7% of the conglomerate's market cap. That's a significant enough level that Apple's performance matters to Berkshire. But just how much does it matter?
Over the past five years, the correlation coefficient between Apple's and Berkshire's stock performances using monthly returns is 0.49. That's a moderate correlation; 1.0 is very strong.
Could Berkshire Hathaway's share price jump if Apple reports exceptionally great results later this week, though? Maybe. However, if history is any guide, don't count on it.
For example, Apple blew past Wall Street's expectations with its fiscal 2020 third-quarter results, reported on July 30, 2020. The company also announced a 4-for-1 stock split that excited investors. Apple stock promptly soared 10.5% the next day. Berkshire Hathaway's share price increased by less than 1%, a ho-hum move despite Apple's great quarterly update.
On Jan. 27, 2022, Apple again posted terrific results. Apple CEO Tim Cook's comments about increased investment in augmented reality also captured investors' attention. Apple stock jumped 7% the following day. What about Berkshire Hathaway? Its shares also rose, but by a much less impressive 1.7%.
Buy Berkshire Hathaway stock?
So should you scramble to buy Berkshire Hathaway stock before Apple reports its results on Jan. 30? Probably not. The better question, in my view, is: Should you buy Berkshire stock regardless of what happens with Apple?
There's a reasonably solid argument that you shouldn't buy Berkshire. Even Buffett doesn't seem to think his own stock is a great pick right now. After six straight years of stock buybacks, Berkshire didn't repurchase any of its shares in the third quarter of 2024.
That appears to be a clear sign Buffett doesn't view the valuation of the company he runs as attractive. Indeed, Berkshire trades at a forward price-to-earnings ratio of 23.6. That's more expensive than the stock has been in a while.
Analysts aren't predicting exceptional growth for Berkshire Hathaway anytime soon, either. The consensus Wall Street estimate is that the conglomerate's revenue will increase by less than 1% in 2025, with earnings per share rising by roughly 2%.
Despite these concerns, though, I still think Berkshire Hathaway is a good stock for investors to own over the long term. Its businesses generate reliable cash flow. Berkshire offers almost ETF-like diversification, with its subsidiaries and equity holdings spanning a wide range of industries. The company also has a massive cash stockpile that it can put to good use when stocks are valued more attractively.
I don't think there's any reason to rush to invest in Berkshire. But it's still a stock to keep on your radar.
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Keith Speights has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
