The One-Click Way to Trust Your Money to a Legend

Warren Buffett is one of the world's best-known investors...

His calls are closely watched by investors at all levels of the market. And his company's annual meeting draws tens of thousands of people every year. Everyone's looking for clues on what he's doing with his money.

So many people want to follow Buffett, the Securities and Exchange Commission regularly lets his company delay its normal filings about its stock ownership. Otherwise, everyone would be competing with him as he tries to build a position in his favorite companies, or exit a position in a stock he no longer loves.

But rather than competing against Buffett, folks can instead buy shares of his $600 billion holding company – Berkshire Hathaway (NYSE: BRK-B).

(Berkshire has two classes of shares – the "A" shares and the "B" shares. Berkshire launched the B shares in 1996 to give individual investors easier access to the company, since the A shares traded for around $20,000 per share at the time. The B shares are worth about one-1,500th of the A shares, and that's the share class we're highlighting today.)

Berkshire began its insurance business back in 1967, when it bought National Indemnity for $8.6 million... and it has grown ever since. Today, Berkshire is best known for owning the insurance company GEICO. But it's not strictly an insurance business...

Among its other significant businesses are rail-freight company BNSF Railway, Berkshire Hathaway Energy (formerly MidAmerican Energy), specialty-chemicals manufacturer Lubrizol, industrial company Marmon, and candymaker See's Candies.

Berkshire also owns large stakes in fellow Global Elite firms like Apple (AAPL), credit-card giant American Express (AXP), and soft-drink titan Coca-Cola (KO).

And these businesses perform fantastically for Berkshire...

Through the end of 2020, Berkshire Hathaway has grown in book value at an annual rate of 20%. Since 1965, that works out to a 2,810,526% gain. To make sense of that crazy number, $100 invested with Buffett in 1965 would (at the end of last year) be worth around $2.81 million today.

Over the past 12 months, the company has generated around $245 billion in revenue. About $27 billion came through the doors in free cash flow. The company's assets now total $873 billion – about $138 billion of that is in cash and short-term investments as of the end of 2020. Meanwhile, total debt is just $128 billion.

Buffett always has cash available for rainy days... And he uses his hoard of cash to buy large positions in Global Elite companies when they trade cheaply.

And sometimes this includes his own company. You see, Buffett loves to reward shareholders...

Berkshire recently announced its fourth-quarter and full-year results. In the fourth quarter, it grew its earnings per share over the same quarter from the previous year.

That wasn't the only good news to come out of Berkshire's report... The company also announced that it had bought back $9 billion worth of shares in the fourth quarter. That brought its total buyback for 2020 to around $25 billion.

In the past, Buffett announced that he would buy Berkshire Hathaway shares when they fell to a price-to-book ratio of 1.2 or lower.

Book value is a rough measure of the value of a company's assets if they were liquidated. So the price-to-book ratio looks at the market value of the company (its market cap) relative to its book value.

The shares spent most of 2020 a few months below 1.2 times book value in early 2020 because of the coronavirus-induced sell-off. That's likely why we saw Berkshire buy back so much stock last year. Today, BRK-B trades at about 1.3 times book value, so shares are just above Buffett's official "buy point."

But Buffett is still buying back shares. According to a report from Reuters, the company has repurchased another $4 billion in shares so far in 2021. As long as shares remain near this point on a valuation basis, Berkshire will continue rewarding shareholders.

Shares jumped on the news of the buybacks, rising about 3%. But that only continued the uptrend for Berkshire's stock...

Since their March 2020 low, the stock has climbed steadily to a fresh all-time high, rising nearly 60% over that period. And on a longer-term basis, the uptrend is still intact, with shares up 85% over the past five years.

Berkshire Hathaway is a great way to invest alongside one of the world's best investors. And its shares are trading cheaply – evident by the company's recent share repurchases.

Sometimes investing is simple.