Warren Buffett’s Berkshire Hathaway is having a stellar year in 2025. The company’s stock has jumped 16% while the S&P 500 has dropped 2%. Investors are flocking to Buffett’s company because of its huge cash reserves and reputation.
Buffett is known for capitalizing on market chaos. The 94-year-old business icon and his company are being sought after by investors who seek shelter from volatile markets. They trust the legendary bargain hunter to pounce if asset prices crash and the economy tanks.
“Berkshire is a stable, solid ship in a sea of uncertainty right now,” said Paul Lountzis, president and founder of Lountzis Asset Management. The longtime Berkshire shareholder highlighted the company’s “rock of Gibraltar” balance sheet, which boasted significant cash, Treasurys, and other liquid assets at the end of December, and stocks worth more than $270 billion. During his 60 years in charge, Buffett has transformed Berkshire from a failing textile mill into a diversified conglomerate.
He’s acquired scores of businesses across various industries and built multibillion-dollar stakes in blue-chip stocks.
Berkshire excels amid market decline
Berkshire stock has soared in value by more than 5,500,000% during Buffett’s tenure, crushing the S&P’s roughly 39,000% gain over the same period.
Buffett specializes in spotting and scooping up stocks and businesses at a discount, a strategy that is most effective when prices tumble and the pool of buyers dries up. “Warren Buffett has often demonstrated he is at his best with capital allocation during market turmoil,” said Macrae Sykes, a portfolio manager at Gabelli Funds. Berkshire’s business performance has also made it a draw for investors.
The company generated about $30 billion in operating cash flow last year, or about $600 million a week. Geico’s profits soared last year as Todd Combs, the car insurer’s CEO and one of Buffett’s two investment managers, boosted efficiency and updated its underwriting practices. Buffett and Berkshire have become virtually synonymous, making it hard to imagine another CEO filling his shoes.
Yet the demise of his longtime business partner, Charlie Munger, underscored that the Buffett era is nearing an end. Buffett has worked to build shareholders’ comfort with Greg Abel, the head of Berkshire’s non-insurance businesses and his chosen successor. A final reason for Berkshire’s stock gains this year is confidence in Abel’s ability to make Berkshire’s subsidiaries perform well and allocate the company’s capital wisely.
“There is not much more he could do — though I do wish he could clone himself and Charlie to keep running it for another 60 years,” said Lountzis.
Image Credits: Photo by Behnam Norouzi on Unsplash
