Berkshire Hathaway Inc. (BRK-B): A Bull Case Theory

We came across a bullish thesis on Berkshire Hathaway Inc. on Kingswell’s Substack. In this article, we will summarize the bulls’ thesis on BRK-B. Berkshire Hathaway Inc.'s share was trading at $486.21 as of June 25^th. BRK-B’s trailing and forward P/E were 12.96 and 24.15, respectively, according to Yahoo Finance.

Berkshire Hathaway’s Q1 2025 results reflected a modest operational dip obscured by currency fluctuations. While headline operating earnings dropped 14.1%, the decline was just 2.6% excluding foreign exchange swings. Operating cash flow rose to $10.9 billion, and Berkshire’s cash balance swelled to $328 billion, excluding Treasury payables and cash in subsidiaries. Buffett, though uneasy with this hoard, cited a lack of compelling opportunities, despite almost deploying $10 billion during the quarter.

The cash build was aided by a halt in share repurchases, partly due to the 1% excise tax. Berkshire remained opaque about its equity investments, withholding details on its top five holdings (Apple, American Express, Bank of America, Coca-Cola, and Chevron), though no changes in names were reported. It was a net seller for the tenth consecutive quarter.

Insurance underwriting fell $1.26 billion, primarily from SoCal wildfire losses, but GEICO defied the trend with standout results, achieving a remarkable 79.8% combined ratio. Investment income rose as more cash was deployed in Treasuries, and Berkshire’s float edged up to $173 billion. BNSF Railway earnings rose 6.2%, driven by consumer products, but Buffett noted it’s underperforming. Berkshire Hathaway Energy rebounded with 53% higher net income and progress on wildfire litigation.

The manufacturing, service, and retail (MSR) group was mixed. Precision Castparts and NetJets performed well, but Lubrizol, IMC, and building products dragged down manufacturing earnings. Clayton Homes posted higher sales but lower profits due to rising interest expense. Retailing saw gains at BHA and home furnishings, while other retailers lagged. Pilot’s earnings surged on lower interest costs, and McLane improved margins despite falling sales.

Previously, we covered a bullish thesis on Berkshire Hathaway Inc. (BRK-A) by FluentInQuality in December 2024, which highlighted the company’s diversified operations, strong cash flows, and Buffett’s disciplined investment strategy. The company’s stock price has appreciated by approximately 6.5% since our coverage. This is because the thesis has continued to play out. Kingswell shares a similar view but emphasizes recent Q1 2025 performance and capital allocation shifts.

BRK-B is on our list of the 30 Most Popular Stocks Among Hedge Funds. While we acknowledge the risk and potential of BRK-B as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.