1 Reason to Buy Berkshire Hathaway (BRK.A) Stock

Key Points

• CEO Warren Buffett has helped make Berkshire Hathaway one of the world's most successful companies.

• Berkshire Hathaway has actually significantly underperformed the S&P 500 index this year, but the stock looks like a smart long-term play.

• Berkshire's massive cash pile and proven team of leaders and analysts makes the stock a worthwhile investment.

• 10 stocks we like better than Berkshire Hathaway ›

Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) is one of the world's largest and most successful companies. Led by visionary investor and CEO Warren Buffett since 1965, the investment conglomerate has a market capitalization of roughly $995 billion -- and it ranks as the 11th-largest overall business in the world.

Buffett has been an incredible leader for the company and helped it to crush the broader market over the last half century, but he's poised to step down as the company's CEO at the end of this year. Board chairman Greg Abel will be succeeding Buffett in the CEO role -- a passing of the torch that will mark one of the most high-profile leadership transitions in finance history.

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While Buffett's move out of the CEO role could create some uncertainty for the stock heading into next year, the company has a great team of analysts and seems to have a strong succession plan in place. Even with a key management transition on the near horizon, there's a great reason to buy Berkshire Hathaway stock right now.

Berkshire Hathaway stock looks like a smart defensive investment

Berkshire stock has gained roughly 2% year to date as of this writing -- a performance that lags significantly behind the S&P 500 index's gain of roughly 8%. Some of the reasoning for the relative underperformance is relatively clear.

Berkshire has been a substantial net seller of stocks over the last year and opted to stay on the sidelines as some growth-dependent plays have seen huge valuation gains and helped push major indexes to new record levels. While this has meant that Buffett's company has missed out on some of the effects of the market's recent rally, it also makes the investment conglomerate's stock more appealing as a defensive play right now.

Berkshire has a fantastic team of stock pickers, and the company has amassed a $344 billion cash pile that it will deploy when the team thinks bargains are available. For long-term investors, Berkshire continues to have the makings of a portfolio anchor with market-beating potential.

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Keith Noonan 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.