Warren Buffett has built Berkshire Hathaway, Inc. B into one of the most recognizable companies in the world. These risks include who will run the company after Buffett is no longer at the helm, credit downgrade risk and the company being defined by government regulators as systemically important. The large conglomerate is involved in a wide variety of businesses. The main core of the Berkshire empire is insurance.

The company has lines in property, casualty and reinsurance. From this insurance base, Buffett has built Berkshire over the years with small and large acquisitions. The company has interests in everything from railroads to energy, cowboy boots and furniture. Berkshire is still growing.

Further acquisitions grow this revenue even more. Although Berkshire is already large, it still has room for growth. Those who were brave enough to risk investing in Berkshire early on have profited handsomely. Buffett is not a believer in stock splits , saying he never split the stock because he does not want short-term speculators to try and profit on the stock.

If the stock were cheaper, those speculators could jump in and out of positions. One of the main risks to Berkshire is the succession plan after Buffett is no longer with the company.

Buffett is still going strong at 86, with over 50 years at the helm of Berkshire. Still, he and his year old lieutenant Charlie Munger , Vice Chairman of Berkshire, will not be around forever. To that extent, Buffett and Munger have discussed the succession plan in their famed letters to shareholders.

The main question for investors is who might be the new CEO of the company. Jain is known as an underwriting genius who has earned the insurance operations billions over the years. Abel is younger and may be more used to being in the limelight. He previously ran the hedge fund Peninsula Capital Advisors.

3 Reasons Other Than Buffett to Buy Berkshire Stock

Buffett and Weschler became close after a few years. Buffett eventually extended an offer for Weschler to join Berkshire. Combs was also previously a hedge fund manager and joined Berkshire in Berkshire is clearly considering the succession issue, which should allay some fears of investors.

The larger question is whether the portfolio managers and the CEO will be able to match Buffett's performance.

Buffett is undoubtedly a business genius on many different levels. Only time will tell what happens with the Berkshire empire after Buffett and Munger are no longer there. As of December , Berkshire holds an AA investment-grade credit rating after officially acquiring the company in the beginning of the year. At the time of completing the acquisition, Precision Castparts Corp.

The agency has twice previously downgraded Berkshire. It downgraded the company in when Berkshire bought BNSF Railway, and then again in , as it changed its standards for evaluating insurance companies. Still, Buffett is a conservative investor. Another risk is whether Berkshire will be defined by government regulators as systemically important.

The Bank of England asked U. This designation requires companies to submit to oversight by the Federal Reserve. It comes along with enhanced capital restrictions and liquidity requirements. Buffett has argued that Berkshire should not be slapped with this designation.

Another significant factor is Berkshire was able to stay strong during the financial crisis. The company provided short-term help and liquidity to other companies, including Goldman Sachs , General Electric and Harley Davidson, during the crisis. However, the government has placed the systemically important designation on other large insurance companies including AIG, Prudential and MetLife. Berkshire is undoubtedly one of the largest insurance companies in the world and has exposure to large catastrophic events.

Berkshire is different from these other companies that operate mainly in the insurance sector. It is much more widely diversified in its businesses. Thus, it is questionable whether Berkshire meets this requirement. Dictionary Term Of The Day. A measure of what it costs an investment company to operate a mutual fund.

Latest Videos PeerStreet Offers New Way to Bet on Housing New to Buying Bitcoin? This Mistake Could Cost You Guides Stock Basics Economics Basics Options Basics Exam Prep Series 7 Exam CFA Level 1 Series 65 Exam. Sophisticated content for financial advisors around investment strategies, industry trends, and advisor education.

The Biggest Risks of Investing in Berkshire Hathaway Stock BRK. B By John Edwards Updated December 14, — 3: Succession Plan for Berkshire One of the main risks to Berkshire is the succession plan after Buffett is no longer with the company.

Systemically Important Designation Another risk is whether Berkshire will be defined by government regulators as systemically important. Berkshire Fine Spinning Associated and Hathaway Manufacturing Company merged in to form Berkshire Hathaway.

Berkshire Hathaway reported another massive jump in earnings and book value growth, leading Buffett to address the company's buyback plans. At the current price, Berkshire shares look set for another market-beating decade. Read about the key financial ratios to analyze Berkshire Hathaway. Berkshire Hathaway was a favorite among hedge fund managers last year. What is the draw at this particular point in time? Discover how Warren Buffett's Berkshire Hathaway is structured and if the company is appropriate for individual retirement accounts.

Barron's Buzz: Berkshire Hathaway a Buy Beyond Buffett?

Wells Fargo fallout, the Apple of Buffett's eye, self-driving cars and more. What does that mean for Berkshire Discover what Warren Buffett's surprising answer is to the question of what was the single worst investment that the "oracle Explore the theory that Berkshire Hathaway stock carries a Warren "Buffet Premium" that would disappear upon his death and Buffett's Berkshire Hathaway has a stake in several major companies.

Find out which company Understand Warren Buffet's fundamental approach to investing and learn why his basic investment strategy explains his no-split Find out why Warren Buffett's holding company, Berkshire Hathaway, may eventually grow so large that it may struggle to maintain Find out all about the main competitors for Berkshire Hathaway, a Warren Buffett-led diversified holding company with involvement No thanks, I prefer not making money.

Content Library Articles Terms Videos Guides Slideshows FAQs Calculators Chart Advisor Stock Analysis Stock Simulator FXtrader Exam Prep Quizzer Net Worth Calculator. Work With Investopedia About Us Advertise With Us Write For Us Contact Us Careers.

Get Free Newsletters Newsletters. All Rights Reserved Terms Of Use Privacy Policy.