Recently, Warren Buffett said that the almost 10% pullback we saw in February was not big enough to get Berkshire Hathaway (NYSE: BRK-B | BRK-B Price Prediction) excited. He pointed out that he has seen the stock market down 50% three times in his career, so a small pullback like we saw this year was nowhere near enough to create the opportunities needed to justify using some of the gigantic cash pile that Berkshire Hathaway has stuffed into Treasury T-bills. The Buffett indicator, the metric most important for justifying stock purchases at Berkshire Hathaway, compares the value of corporate equities to gross domestic product. At a whopping 230%, it is nowhere near the 70% to 80% range that Buffett has noted in the past is a solid level for buying stocks. He has also pointed out that investors are playing with fire at or above the 200% level, as was the case in 1999 and 2000.
The gigantic rally over the past five years, from June 2021 to today, is impressive. The S&P 500 is up a stunning 75%, including years with massive selloffs, like 2022. But the surge over the past two years has been propelled by first the Magnificent 7 mega-cap tech companies, then artificial intelligence and data center chip stocks, which have been very narrow, as most of the S&P has not participated in the huge gains. In fact, technology stocks now account for approximately 32% of the S&P 500’s total market value, with the five largest tech companies alone making up nearly 30% of the index. This extreme concentration has dramatically skewed the benchmark’s performance, as a handful of tech giants have been responsible for the overwhelming majority of the index’s recent gains.
Berkshire’s 11% underperformance relative to the S&P 500 in 2026 boils down to a few compounding and frustrating headwinds: a $397 billion cash pile earning T-bill yields while the market rallied hard, a deliberate retreat from equities that proved ill-timed, and a leadership transition that shook investor confidence. Its sheer size makes transformative acquisitions nearly impossible, and its “old economy” tilt toward railroads, insurance, and energy meant it sat out the AI-driven tech surge that powered index returns. Remember, the only reason the S&P 500 and the Nasdaq are up this year is the technology sector’s outperformance. In short, Berkshire got penalized for being cautious and boring, though for patient, long-term investors, that may ultimately prove to be a feature, not a bug.
Here are the five reasons why Berkshire Hathaway is my favorite stock for the rest of 2026 and the next 20 years.
Gigantic Pile of Cash
Berkshire Hathaway is sitting on the largest cash pile in its history: $397.4 billion at the end of Q1 2026, equal to roughly 59% of its investable assets. In fact, it’s enough cash to buy 470 to 480 of the S&P 500 companies. That massive reserve acts as a powerful safety net in the event of a recession or market downturn, while giving CEO Greg Abel tremendous flexibility to pursue attractive acquisitions or make bold capital investments in businesses Berkshire already owns. When the right deal finally appears—and it always does—this kind of financial firepower is truly exceptional.
Strong Earnings
Berkshire’s operating earnings rose 18% to $11.35 billion in Q1 2026, boosted by a robust 28.5% jump in insurance underwriting profit to $1.72 billion. Net income more than doubled to $10.1 billion. This isn’t just accounting noise; it’s a clear reflection of genuine operational strength across Berkshire’s massive portfolio of businesses.
Portfolio Built to Withstand Disruption
Over the past 60 years, Berkshire has assembled a portfolio of operating businesses and investments that are remarkably resilient to disruption from AI and emerging technologies. Railroads, insurance, energy, and consumer staples form the core. These are classic businesses protected by wide, durable competitive moats that are unlikely to be upended overnight.
Buybacks Have Started
Berkshire ended its 21-month buyback moratorium because its shares finally became attractive enough to repurchase. The price-to-book ratio fell to 1.4 in March, well below the 60% to 80% premium range that had kept buybacks on hold for nearly two years. Consistent with Berkshire’s long-standing policy, the company repurchases shares only when management believes the stock is trading below its intrinsic value. The resumption of buybacks is therefore a clear signal that they view the current price as undervalued. If they think it is, investors will, too.
The Right Man to Lead the Way
Abel personally purchased $15 million of Berkshire shares. That amount is roughly equal to his entire after-tax annual salary. In addition, he has committed to repeating the buy each year going forward. Given his decades-long tenure at the company, Abel is unlikely to make abrupt changes to Berkshire’s direction. However, his more active management approach could still unlock meaningful growth in the years ahead. Having skin in the game and maintaining strong cultural continuity send a powerful positive signal that will likely resonate with investors for decades to come.
Berkshire’s Wholly Owned Private Companies
Owning shares of Berkshire Hathaway means also owning an impressive list of private companies in the portfolio.
Insurance
- GEICO (auto insurance)
- General Re (reinsurance)
- Berkshire Hathaway Reinsurance Group
- Alleghany
- Kansas Bankers Surety
Transportation and Logistics
- BNSF Railway (one of the largest freight railroads in North America)
- FlightSafety International (pilot training)
- NetJets (fractional aircraft ownership)
Energy and Utilities
- Berkshire Hathaway Energy (parent of MidAmerican Energy, PacifiCorp, NV Energy, Northern Powergrid)
Manufacturing and Industrial
- Marmon Holdings (100+ industrial businesses)
- Precision Castparts (aerospace/industrial components)
- IMC International Metalworking Companies
- Acme Brick
- OxyChem (acquired in January 2026 for $9.7 billion, the most recent major addition)
Retail and Consumer
- Dairy Queen
- See’s Candies
- Ben Bridge Jeweler
- Borsheims Fine Jewelry
- Nebraska Furniture Mart
Building and Home
- Benjamin Moore (paints)
- Clayton Homes (manufactured housing)
- Shaw Industries (flooring)
- Johns Manville (insulation/building products)
Finance and Services
- Berkshire Hathaway HomeServices (real estate brokerage)
- CORT Business Services (furniture rental)
- Berkadia (mortgage financing, 50% JV)
Berkshire has a staggering 800 subsidiaries worldwide, but these are the flagship names that drive the bulk of operating earnings.
The Wrap Up
The Berkshire Hathaway shares are trading roughly 10% off their all-time high, sitting on a record cash pile, with buybacks just resuming and a new CEO who’s eating his own cooking. For long-term investors, that’s a rare combination. That said, always do your own due diligence before investing. With an overbought stock market and the AI/data center trade still dominating investor sentiment, this may be the best opportunity to own a legendary company.
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