Berkshire Hathaway stock BRK B performance

Ever feel like investing is too complicated? What if you could own a piece of dozens of different companies—from insurance to ice cream—with just a single purchase? That’s the core idea behind Berkshire Hathaway and the simple strategy that made Warren Buffett a legend.

Berkshire isn’t one single business; it’s a holding company. The easiest holding company definition is to think of it like a giant shopping cart filled with other businesses. In practice, this means the diverse Berkshire Hathaway portfolio holdings impact its overall success, creating a unique investment.

So, what drives Berkshire Hathaway’s stock value? It’s the collective performance of everything in that cart. You’re owning a tiny piece of GEICO’s insurance policies, See’s Candies’ chocolates, and even a slice of Apple, all at once.

BRK.A vs. BRK.B: Why Are There Two Berkshire Hathaway Stocks?

When you search for Berkshire Hathaway stock, you’ll likely notice two tickers: BRK.A and BRK.B. While their prices are wildly different, they both represent ownership in the exact same collection of companies. Think of it as one giant pizza that can be bought either whole or by the individual slice; both give you the same ingredients.

The original “whole pizza,” BRK.A, carries its famous six-figure price tag for a reason. Warren Buffett intentionally kept the price high to attract dedicated, long-term partners rather than short-term speculators. For decades, this strategy made owning a piece of the company impossible for most people.

In response, Berkshire created BRK.B, the affordable “slice” for everyday investors. These “baby Berkshire” shares give you a piece of the same pie for a fraction of the cost. Because this is the stock most people actually buy, its performance is the one that truly matters to the average investor.

The Ultimate Report Card: How Has BRK.B Performed Against the S&P 500?

Knowing what BRK.B is, the big question is: how has it actually performed as an investment? Simply seeing a stock price go up doesn’t tell the whole story; you need to compare it to the overall market. For this, investors use a benchmark called the S&P 500. Think of it as the average grade for a class made up of 500 of the largest U.S. companies. It sets the standard.

So, how has BRK.B performed against the S&P 500? Over the long run, the results are impressive. A historical price chart of BRK.B shows that while there are always ups and downs, its growth has consistently outpaced the market average. As the graphic below illustrates, an investment in Berkshire two decades ago would have grown substantially more than the same money in a fund tracking the S&P 500.

This consistent outperformance isn’t an accident. While past results are never a guarantee for the future, Berkshire’s track record is seen as powerful proof of a winning strategy. It begs the question: how did they do it?

What’s the Secret Sauce? Understanding Warren Buffett’s Winning Strategy

So, what’s the secret sauce? It’s not a complex trading algorithm. The success of Warren Buffett’s investment strategy comes down to a simple philosophy: buy wonderful, easy-to-understand businesses at a fair price. This focus on durable companies, rather than chasing short-term trends, provides a steady foundation for growth.

Next, he looks for a strong competitive advantage, what Buffett famously calls a “moat.” Like a ditch protecting a castle, a business moat—such as GEICO’s massive brand recognition—shields its profits from rivals. This long-term defense is a key driver of the company’s sustained value.

The final ingredient is patience. Berkshire’s favorite holding period is “forever,” allowing the value of its businesses to compound for decades. This strategy of reinvesting profits is powerful, but it leads many investors to ask a common question.

If It’s So Profitable, Why Doesn’t Berkshire Pay a Dividend?

Given its success, many wonder why Berkshire Hathaway doesn’t pay a dividend—a cash payment companies often give to shareholders. The answer lies at the heart of Warren Buffett’s strategy. Instead of handing out profits, Berkshire reinvests them. It uses that money to buy new companies or help its existing ones grow even bigger. Think of it as using your savings to add a new room to your house, making the entire property more valuable.

This approach hinges on Buffett’s belief that he can generate more than $1 of future value for every $1 he keeps. This growth is measured by the increase in Berkshire Hathaway’s book value, which is essentially the company’s net worth. This strategy of constant reinvestment has dramatically grown its book value over the decades, making the whole company a much bigger pie and rewarding shareholders far more than a small cash payout could have.

Is Berkshire Hathaway a Risky Investment?

No investment is guaranteed, and even Berkshire Hathaway faces challenges. One of the biggest risks of investing in Berkshire Hathaway is leadership: what happens after Warren Buffett? This question about the future outlook for Berkshire Hathaway stock is a central theme at every annual meeting, as continuing his legendary performance is a tall order for any successor.

Another challenge is simply the company’s colossal size. It’s much harder to find billion-dollar deals that can meaningfully grow a company that’s already a giant. Because of this, while still a powerful force, its days of explosive growth are likely in the past.

A Clearer View of Berkshire Hathaway

Berkshire Hathaway is not a single, complex company but a diverse collection of quality businesses accessible through its BRK.B shares. Its success comes from a clear strategy: buy wonderful companies, defend them with a competitive “moat,” and reinvest the profits for long-term compounding. Its historical performance against the S&P 500 benchmark speaks for itself.

This foundational knowledge moves you beyond simply asking if it’s a good investment and toward evaluating its performance and strategy on your own terms.