Do You Roll with Buffett? Consider Berkshire Hathaway on Stash

Do you want to roll with Warren Buffett? Buffett, also known as the Oracle of Omaha, is one of the most successful investors of all time.

Starting out with a paper route and a modest childhood in Nebraska, Buffett went on to build a multi-billion dollar company called Berkshire Hathaway, and a personal fortune worth nearly $80 billion. These days, when the Oracle speaks, people tend to listen. In fact, he’s the subject of nearly 50 books about investing

The secret to Buffett’s success? Finding companies that are diamonds in the rough, which have consistently performed, been profitable, have good management, and are durable performers in their industries over the long term.

While many of Buffett’s picks may lack the immediate appeal of hot tech stocks like Apple or Facebook, Berkshire companies are known for winning the race, slow and steady. In fact, Buffett’s eye for value has helped Berkshire Hathaway’s share price increase a staggering 1,800,000 percent in the last 50 years, compared to the S&P 500’s increase of 2,300% over the same time period.

Source: Business Insider

You can get in on the action with Roll with Buffet, otherwise known as Berkshire Hathaway-B.

What’s inside Roll With Buffett

Berkshire Hathaway is what’s known as a conglomerate. That means it owns numerous companies under one umbrella. In fact, it owns 63 companies, some of which are among the most recognized brands in the U.S., including battery maker Duracell, and underwear manufacturer Fruit of the Loom. It also owns paint company Benjamin Moore, and the confectioner See’s Candies.

In addition to manufacturing, Berkshire also has a strategy of investing in the property/casualty insurance market, as well as energy businesses. In its most recent annual report, Buffett writes that his bets in insurance have fueled much of the company’s gains over the last 50 years. One of its crown jewels is automobile insurer Geico.

But Berkshire Hathaway isn’t only about the companies that it owns outright. With a market cap of $483 billion as of December 7, 2017, it also has large equity stakes in companies including Wells Fargo Bank, United Airlines, and American Express. That means in addition to what Berkshire owns outright, it also owns a significant portions of other large U.S. companies it believes in.

Roll With Buffett: Berkshire Hathaway Class B

Berkshire Hathaway is a public company with two classes of shares: Class A shares and Class B shares. Confused? Don’t be.

Its class A shares are for professional investors, meaning people or institutions with a lot of cash to spend, and a lot of investing experience. These shares are worth nearly $294,000 each, as of December 8, 2017*.

Source: Yahoo Finance

It also sells Class B shares for regular investors, for relatively more affordable $195.92*. But even that may be too much for many investors to afford.

Roll with Buffett allows Stash investors to purchase what’s known as fractional shares–or an amount less than the full value of one share– of Berkshire Hathaway. Essentially that means you can invest much smaller dollar amounts than full price of one Class B share.

Who is this investment for?

If Buffett’s strategy of finding undervalued but well-managed companies that are likely to be slow and steady performers sounds like a good strategy, this investment might be for you.

Similar funds

Buffett’s strategy is all about finding undervalued companies he thinks will outperform the market. Funds with a similar investing strategy include iShares Edge MSCI USA Value Factor ETF, which had a return of 20% as of November, 2017. By comparison, Berkshire Hathaway’s returns have been 19% year to date.**

Other considerations:

Since Roll With Buffett purchases fractional shares of Berkshire Hathaway stock, there is no expense ratio directly associated with the investment, as there would be with an ETF or mutual fund.

Risks

Warren Buffett is known as one of the world’s leading investors, but questions abound about what will happen to Berkshire Hathaway when he’s no longer running it. Buffett is 87, after all, and won’t be in charge of his company forever. Additionally, when you purchase fractional shares of Berkshire Hathaway, you’re still buying stock in a single company–even if it does own 63 separate businesses. Purchasing the stock of a single company can increase risks.

Key Takeaways

  • Roll with Buffett lets you invest like Warren Buffett, one of the world’s most influential investors.
  • You’re purchasing fractional shares of Berkshire Hathaway, a conglomerate that owns 63 separate companies.
  • Buffett purchases companies with an eye to value and growth over the long haul.

*Share price as of December 7, 2017, as detailed by Yahoo Finance.

**BH class B shares were $164.34 January 2, 2017 according to Yahoo Finance, and share price was $195.58 as of December 8, 2017.




Source: Tradeview. Chart operates in real time, with delays. ***See Footnote



Footnotes
***Charting platform used for this analysis is provided by TradingView and may be delayed. Stash does not verify any data and disclaims any obligation to do so. Stash cannot and does not represent or guarantee that any of the information available via TradingView is accurate, reliable, current, complete or appropriate for your needs.




Disclaimers
This material has been distributed for informational and educational purposes only, represents an assessment of the market environment as of the date of publication, is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice or opinion. Stash assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. The strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. There is no guarantee that any strategies discussed will be effective.

Furthermore, the information presented does not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services, and should seek advice from an independent advisor before acting on any information presented.

Past performance does not guarantee future results. There is a potential for loss as well as gain in investing. Stash does not represent in any manner that the circumstances described herein will result in any particular outcome. While the data and analysis Stash uses from third party sources is believed to be reliable, Stash does not guarantee the accuracy of such information. Nothing in this article should be considered as a solicitation or offer, or recommendation, to buy or sell any particular security or investment product or to engage in any investment strategy. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. Stash does not provide personalized financial planning to investors, such as estate, tax, or retirement planning. Investment advisory services are only provided to investors who become Stash Clients pursuant to a written Advisory Agreement. For more information please visit www.stashinvest.com/disclosures.

StashInvest has no affiliation with Berkshire Hathaway, Inc. or Warren Buffett and this is not to be considered as an endorsement by Berkshire Hathaway, Inc. or Warren Buffett.

*https://www.theonlineinvestor.com/large_caps/