Many investors believe Berkshire Hathawayof (NYSE: BRKA) (NYSE: BRKB) Large cash reserves (totaling $382 billion as of the end of the third quarter) are considerations Group company shares. In fact, a company’s cash on hand and ability to add inventory are valid motivations for considering the stock.
The good news is that cash isn’t the only reason to consider Berkshire Hathaway today. As we all know, Greg Abel takes over CEO (CEO) Warren Buffett retires. This succession plan was widely reported, which isn’t surprising, but a change in leadership could be a catalyst for the stock.
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Since Abel just took over, investors still have plenty of time to evaluate the stock before a new leader emerges.
None of this is an attack on Buffett. He deserves a place on the investment world’s Mount Rushmore, having run Berkshire for sixty years. As a result, companies can benefit from a new perspective. as one of my A colleague at Fool.com recently pointed outOne of Berkshire’s greatest assets is flexibility. With a mountain of cash and dozens of companies, Berkshire has ample leverage to drive change.
Abel has shown his ability to adapt. Last month, Berkshire revealed in a regulatory filing that it would stop investing in Kraft Heinzwhich would become one of Buffett’s rare gaffes.
Kraft Heinz is just one example, but the divestment shows Abel is taking a more hands-on approach to Berkshire’s stock portfolio. Time will tell how things pan out, but Kraft Heinz likely won’t make mistakes under Abel’s leadership. There were already signs of increased liquidity as Berkshire reduced its holdings in nine stocks during the fourth quarter.
That doesn’t mean Berkshire will abandon long-term investing under Abel’s leadership. Still, the company can improve returns by becoming more nimble through its equity positions and umbrella companies.
Before buying Berkshire Hathaway stock, consider the following factors:
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