Berkshire Hathaway: Navigating Post-Buffett Era with Strategic Moves and Resilient Core Business

Berkshire Hathaway B (BRK.B) saw a modest rise of 0.72% last week, accumulating gains of 2.17% over the past week and marking an increase of 6.79% since the beginning of the year. As of now, the company boasts a market capitalization of $1044.30 billion.

On July 21, 2025, this multi-faceted holding company recorded a trading volume of $1.803 billion, ranking 33rd in terms of trading value among U.S. stocks for the day. The volume was slightly down by 5.45% from the previous day with 3.7913 million shares traded. Conversely, BRK.B experienced a slight uptick of 0.13% in its share price closing at $474.41, despite having faced a dip of 0.40% over the prior five trading days and reducing by 2.34% in July alone. Nevertheless, since the start of the year, it has climbed 4.66%, demonstrating resilience and a 52-week gain of 9.19%.

In early May, Berkshire Hathaway B disclosed its financial results for the first quarter of fiscal year 2025. The company reported revenues totaling $83.290 billion, signifying a year-over-year decline of 9.22%, alongside a significant drop in net profit by 63.59% to $46.72 billion. Berkshire operates through several subsidiaries involved in a vast array of activities, with insurance, railway, and utilities forming the core of its business.

Since the annual shareholders' meeting on May 3, where CEO Warren Buffett announced his retirement at the year's end, BRK.B's stock has struggled, offering a potential buying opportunity according to Buffett's famed strategy of "being greedy when others are fearful." The stock price, having dropped over 10%, underperformed against the S&P 500 by more than 20 percentage points.

Various factors contribute to this underperformance: the fading of the so-called "Buffett premium," concerns about the cyclical peak in the property and casualty insurance sector, lack of significant new investments, no share buybacks for more than a year, and recent shifts in market sentiment away from defensive stocks like Berkshire. Yet, Berkshire Hathaway A maintains numerous strengths. Its core businesses remain leaders across industries, its investment portfolio is diversified with high-potential companies, and the firm's fortress-like balance sheet features over $330 billion in cash reserves, one-third of its $1 trillion market cap, potentially enabling stock buybacks, dividends, or major acquisitions, such as targeting CSX Corporation in the railroad sector.

Despite the stock not being considered cheap, it is still attractive in the current high-valuation market landscape. A-shares are trading around $725,000 with a price-to-book ratio below 1.6 times, maintaining an average level over recent years. Meanwhile, BRK.B shares are recently priced at $480, trading at roughly 24 times expected earnings for 2025, which aligns with the S&P 500. Including Berkshire's vast stock portfolio (featuring Apple, Coca-Cola, and Bank of America, among others) into valuation adjustments, the non-GAAP earnings ratio becomes even lower, about 20 times, under an approach recognized by Buffett.

The company generates an estimated $45 billion annually in operational earnings, likely increasing per-share book value to approximately $525,000 by late 2026, thus reflecting a valuation of only 1.4 times future book value.

Buffett does not appear to plan on retiring imminently; he intends to serve as chairman into 2026. In any case, the three key business segments—insurance, railroads, and utilities—are functioning robustly. Berkshire's insurance segment ranks among the world's largest in property and casualty with Geico facing technological upgrades to resolve past challenges. The utilities segment, under Berkshire Hathaway Energy, encompasses regulated electric utilities, renewable energy assets, and gas transmission lines, investing significantly with hopes to benefit from the AI boom.

Burlington Northern Santa Fe, a subsidiary, alongside competitor Union Pacific dominates freight rail in the U.S. Western market. Union Pacific’s merger talks with Norfolk Southern hint at Berkshire possibly acquiring CSX for a transcontinental railroad network. However, regulatory hurdles are anticipated, with CSX potentially priced at an 800 billion buyout with an expected 800 billion boost to Berkshire earnings by 2026.

Berkshire's prized $300 billion investment portfolio edges down compared to the broader market, with key holdings like Apple dropping by 15%, though gains are observed in stocks such as American Express and Chevron. Strategically, enhancing financial disclosures on post-Buffett management could invigorate stocks further. Potential acquisitions, including the prospect of Western Petroleum or Kraft Heinz, could also reshape its portfolio significantly. Large-scale buybacks or dividends are conceivable, aligning stakeholder interests closely.

Overall, with several pathways yet to explore, Berkshire Hathaway remains a compelling asset in today's volatile markets.