Hook & thesis (short):
Put simply: I'm more bullish on Berkshire Hathaway than I was six months ago. The conglomerate continues to generate durable operating cash flow while management uses that cash to buy businesses and build value. Recent quarterly results show profitability and book value trending higher even as management remains active on the acquisition front. For long-term oriented investors who can tolerate the stock's occasional mark-to-market swings, Berkshire is a buy at current levels.
Below I outline why the market should care, the numbers that support the case, an explicit trade plan (entry/stop/targets), catalysts to watch, and the risks that could derail the thesis.
What Berkshire is and why it matters
Berkshire Hathaway is a decentralized holding company whose cash engine is insurance (Geico, Berkshire Hathaway Reinsurance Group and others). Management uses insurance float plus operating cash flow to own a portfolio of operating businesses (railroad, energy, manufacturing, retail) and publicly traded equities. That structure matters because it creates a self-funding model for acquisitions and shareholder-friendly capital allocation while providing diversified exposure to multiple durable cash businesses (Burlington Northern Santa Fe, Berkshire Hathaway Energy, Precision Castparts, Lubrizol, Clayton Homes, etc.).
Why the market should care: cash generation + deployment. Berkshire is producing material operating cash and has been an active buyer of businesses and securities. When management deploys capital wisely the economic leverage to underlying book value and intrinsic earnings can be significant over multiple years.
Recent performance that supports my bullish stance
- Profitability: For the quarter ended 09/30/2025 Berkshire reported net income of about $30.86 billion and net income attributable to the parent near $30.80 billion. Operating income in that quarter was roughly $15.84 billion — solid operating earnings from the underlying businesses.
- Top-line scale: Revenues for the quarter were roughly $94.97 billion, consistent with the company's very large scale (the firm is expected to generate roughly $375 billion in revenue for the full year 2025).
- Balance sheet / book value: Equity attributable to shareholders rose to about $698.16 billion in the most recent quarter, up materially from the prior quarter. That rise tracks with the strong quarterly net income and reinforces book-value appreciation.
- Cash flow & capital deployment: Operating cash flow for the quarter was positive at ~$13.79 billion while Berkshire recorded significant investing activity (net investing outflow around -$39.05 billion in the quarter), which implies active deal-making and portfolio adjustments. Financing cash flow was small (~+$0.835 billion), showing management prefers acquisition deployment vs. outward capital returns at times.
Those numbers matter because they show Berkshire simultaneously producing large operating cash flow, compounding book value and deploying capital — the value-creation levers that have historically driven outsized returns at the company.
Valuation framing
One awkward but important point: BRK.A's nominal share price (last recorded level ~ $729,425 on 02/03/2026) is eye-catching, but single-share nominal price shouldn't bias an investor. What matters is the relationship between market value and the company's asset and earnings base.
On a book-value basis, equity attributable to the parent sits near $698 billion. The share-price number alone doesn't give us market capitalization in this dataset, so I avoid presenting a strict price/book multiple. Instead, think in practical terms: Berkshire is a giant, asset-rich company with free cash generation and a management team that has historically produced good incremental returns on deployed capital. Given the company's asset scale, recurring operating cash flow and ongoing acquisitions, a near-term premium to tangible book is reasonable if management continues to find attractive deployments that compound value.
In short: valuation looks reasonable to attractive at current price ranges for investors buying a diversified, cash-producing conglomerate with an active capital allocator at the helm — provided that deployments continue to earn acceptable returns.
Actionable trade idea - specific plan
This is a multi-horizon plan for investors comfortable holding through normal volatility:
Trade direction: LONG (core position)
Ticker: BRK.A
Reference price (recent close): ~$729,425 (02/03/2026)
Entry zone: $700,000 - $740,000
Initial position sizing: 2-6% of portfolio for core allocation (adjust to risk tolerance)
Stop-loss (hard): $650,000 (approx. -10% from mid-entry)
Stop-loss (soft / monitoring): $680,000 (tighter risk control for shorter-term traders)
Target 1 (near): $820,000 (approx. +12% from recent close) — 6-12 month horizon
Target 2 (intermediate): $920,000 (approx. +26%) — 12-24 month horizon
Target 3 (stretch): $1,050,000 (approx. +44%) — 24-36+ month horizon
Risk level: Medium (see risks below)
Why these levels? The entry band reflects the recent trading range and gives room for a modest pullback. The hard stop at $650,000 limits downside if the market decides to rapidly re-price conglomerates or if disappointing operating trends emerge. Targets are graduated to reflect likely multi-year compounding rather than a short-term momentum play.
Catalysts that could drive the stock higher
- Continued strong operating cash flow across core subsidiaries and steady net income that lifts book value quarter after quarter.
- Management deployments that earn above-cost-of-capital returns - acquisitions of private businesses or minority stakes in public companies that later re-rate.
- Strategic purchases into energy or railroad assets that generate predictable cash and raise consolidated operating income.
- Significant share buybacks or other shareholder-friendly moves if management chooses to emphasize capital returns (though history shows acquisitions often take priority).
Risks and counterarguments
No bullish view is complete without candid risks. Here are at least four scenarios that could go wrong for the trade, and a short counterargument to the bullish thesis.
- Investment-portfolio volatility: Berkshire's sizeable publicly traded holdings are subject to mark-to-market swings. Past quarters have shown large negative comprehensive income swings in stressed markets; a market sell-off could materially reduce reported comprehensive income and investor sentiment.
- Capital-allocation missteps: The company has the ability to deploy tens of billions of dollars. Poorly timed acquisitions or overpaying for assets can destroy value. The recent pattern of large investing flows demonstrates active deployment — which can be a double-edged sword.
- Leadership / transition risk: Newsflow indicates executive-level changes have been relevant to investor focus. Any perceived deterioration in capital allocation discipline or strategic clarity during a leadership transition could compress the multiple investors are willing to pay.
- Macro / insurance-cycle shocks: Berkshire's insurance operations are exposed to catastrophic loss events and changing reserve dynamics. A large underwriting year or rising claims could pressure earnings and require more capital at the insurance businesses.
- Liquidity / nominal price noise: The high nominal share price can deter some retail flows and cause odd liquidity patterns. For active traders, that nominal price matters tactically even if it is irrelevant to intrinsic value.
Counterargument: Critics will say Berkshire is priced for perfection — a high nominal price, heavy exposure to public securities and an aging leadership profile create downside if markets rerate or capital allocation falters. That is a valid concern; the bull case depends on continued disciplined, value-accretive deployment. If management starts deploying at low returns or the public-equity book takes sustained, large losses, the stock could underperform.
What would change my mind
My bullish stance would weaken if any of the following occur:
- Management materially reduces capital discipline and completes large acquisitions at clearly negative return profiles.
- Insurance underwriting deteriorates sharply, producing recurring losses and capital strain.
- Operating cash flow trends down persistently across multiple core businesses rather than one-off cyclical moves.
Conversely, I would get incrementally more bullish if Berkshire reports sustained quarter-over-quarter increases in operating cash flow, demonstrates disciplined acquisitions that later show strong returns, or visibly scales internal share repurchases at attractive prices.
Bottom line
Berkshire Hathaway is not a quick-flip trade. It is a capital allocation story wrapped around durable operating businesses. The company is producing sizeable operating cash flow, book value is rising, and management remains active deploying capital. Those characteristics support a long bias from current price levels for investors with a medium- to long-term horizon.
My trade plan is explicit: add in the $700,000-$740,000 entry band, place a hard stop near $650,000 to protect capital, and look for staged upside to $820,000, $920,000 and $1,050,000 across the next 1-3 years. Keep position size modest relative to portfolio to manage the known downside scenarios.
If you disagree, make sure your thesis is explicit and that you size the position to fit your tolerance for mark-to-market volatility in a large, diversified holding company.
Disclosure: This is an analyst-style trade idea for educational purposes. It is not personalized investment advice. Do your own due diligence before trading.