Forget the Rest of the Market: Why Berkshire Hathaway Is My #1 Stock Pick
Warren Buffett handed Greg Abel the keys to a $1 trillion empire, but Berkshire is quietly sitting on a record cash pile while the market chases AI stocks. The setup forming right now may be one the Oracle himself would…
Warren Buffett stepped down as CEO of Berkshire Hathaway (NYSE:BRK.B) on December 31, 2025, after six decades of leading the conglomerate he transformed from a struggling textile mill into a $1 trillion empire. The “Oracle of Omaha” left his successor, Greg Abel, with a very concentrated portfolio: 77% of Berkshire’s $355 billion equity portfolio is invested in just seven stocks. Abel, who has served as vice chair overseeing non-insurance operations, officially took over as CEO on January 1, 2026. At 95, Buffett isn’t fully retiring, but he did recently step down as board chair and announced that his son, Howard, will take his place. Warren Buffett remains chairman emeritus.
While Berkshire Hathaway has erased some of its 2026 underperformance against the S&P 500, it still boils down to a few compounding and frustrating headwinds: a $365 billion cash pile earning T-bill yields while the market rallied hard, a deliberate retreat from equities at exactly the wrong time, and a leadership transition that shook investor confidence. Its sheer size makes transformative acquisitions nearly impossible, and its “old economy” focus on railroads, insurance, and energy meant it missed the AI-driven tech surge that powered index returns. Remember, the S&P 500 and the Nasdaq are up this year only because the technology sector outperformed. In short, Berkshire was penalized for being cautious and conservative, 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 beyond.
Gigantic Pile of Cash
Berkshire Hathaway is still sitting on the largest cash pile in its history: $365.5 billion at the end of Q3 2026, equal to roughly 53% of its investable assets. Abel drove the cash drawdown from $397 billion largely by deploying capital, including a $4.53 billion stock buyback program. It’s still enough cash to buy 465 S&P 500 companies entirely. That massive reserve acts as a powerful safety net in a recession or market downturn, while giving CEO 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
The company reported second-quarter results in August that beat consensus. Berkshire’s operating earnings rose 16.3% to $12.9 billion year-over-year. Net income soared to $25.6 billion. This isn’t accounting noise; it reflects genuine operational strength across Berkshire’s massive business portfolio. Total revenue reached a stunning $101.8 billion for the quarter. Net earnings totaled $25.7 billion. Third-quarter results are due on November 6.
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 That Have Started
Berkshire ended its 21-month buyback moratorium because its shares finally became attractive enough to repurchase. The price-to-book ratio stayed at a strong 1.44, 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 therefore signals 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. 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. Abel’s personal investment and commitment to cultural continuity send a powerful signal. A signal that will likely continue to resonate with investors for decades to come.
Berkshire Hathaway’s Wholly Owned Private Companies
When you own shares, you own much more than the 26 companies in the stock portfolio.
Insurance
- GEICO (auto insurance)
- General Re (reinsurance)
- Berkshire Hathaway Reinsurance Group
- Alleghany Corporation
- Kansas Bankers Surety
Transportation & Logistics
- BNSF Railway (one of the largest freight railroads in North America)
- FlightSafety International (pilot training)
- NetJets (fractional aircraft ownership)
Energy & Utilities
- Berkshire Hathaway Energy (parent of MidAmerican Energy, PacifiCorp, NV Energy, Northern Powergrid)
Manufacturing & Industrial
- Marmon Holdings (100+ industrial businesses)
- Precision Castparts (aerospace/industrial components)
- IMC International Metalworking Companies
- Acme Brick Company
- OxyChem, acquired in January 2026 for $9.7 billion — the most recent major addition
Retail & Consumer
- Dairy Queen
- See’s Candies
- Ben Bridge Jeweler
- Borsheims Fine Jewelry
- Nebraska Furniture Mart
Building & Home
- Benjamin Moore & Co. (paints)
- Clayton Homes (manufactured housing)
- Shaw Industries (flooring)
- Johns Manville (insulation/building products)
- Taylor Morrison (acquisition recently completed)
Finance & 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 Berkshire Hathaway shares are trading roughly 5% 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 ruling investor groupthink, this may be the best opportunity to own a legendary company.
Contact [email protected] for any questions or corrections.
Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad, diverse career, including a stint as creative services director at an NBC affiliate in Austin, Texas, gives him unique insight into the financial industry.
Lee Jackson's journey in the financial industry spans more than 30 years, including nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career spanned pivotal sell-side Wall Street events, from the dot-com rise and bubble to the Long-Term Capital Management debacle, 9/11, and the Great Recession of 2008. This reflects his resilience and adaptability amid market volatility.
Lee Jackson’s practical financial industry experience, gained through a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing across various platforms. This unique combination allows him to shed light on the intricacies of Wall Street in a way only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.
Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.
