Andrew Bary

Maybe all that cash isn't such a bad thing.

Berkshire Hathaway is having its best day of relative performance versus the S&P 500 in nearly a year, demonstrating its value as a defensive megacap stock as the market slides. Other defensive groups, including health care and consumer staples, also were having a strong session.

Berkshire's Class A shares were up 2.8% to $760,678 early Wednesday afternoon, while the Class B stock was also up 2.8% to $507.55. The S&P 500 index fell 0.9% as investors continued to worry about the software industry and the technology sector.

A week ago, Berkshire stock had been about eight percentage points behind the S&P 500 so far in 2026. Now, with a 0.8% gain this year, it is slightly ahead.

Berkshire stock is seen as a haven because the company has cash holdings of more than $350 billion, a sizable chunk of its $1.1 trillion market value and far more than any other American company. Cash continued to mount up last year, partly Berkshire was a net seller of stocks for the first three quarters and partly because the company has a diversified earnings stream totaling about $45 billion after taxes annually.

It found only one notable acquisition in 2025, the nearly $10 billion purchase of Occidental Petroleum's chemicals business, which closed in early January. Berkshire hasn't bought back any stock since May 2024.

Chairman Warren Buffett's cautious approach to investments has frustrated some investors because Berkshire has missed many opportunities in recent years. But Buffett and CEO Greg Abel, who took the top job in January, could find more to do if the current market decline deepens.

Buffett gave up the CEO role at the end of 2025 but has said he plans to be in the office daily in 2026 and be available for consultation with Abel.

Some of Berkshire's largest equity holdings are having a strong year. Coca-Cola is up 11% and hit a record high Wednesday, while Chevron has gained about 20% this year. Berkshire's portfolio of five Japanese trading companies also have done well, but Apple and Bank of America are little changed.

Berkshire now trades for about 1.5 times Barron's estimate of its year-end 2025 book value of about $500,000 per Class A share, in line with its average in recent years. Book value likely is higher now than at year end due to gains in the stock market.

Investors are eagerly anticipating Abel's first annual shareholder letter, which is expected when the company discloses its fourth-quarter earnings. Berkshire hasn't set a date for the release, but last year, it came on Saturday, Feb. 22. This year's date could be Saturday, Feb.21.

Berkshire watchers are interested in Abel's views on capital allocation, including the possible initiation of a dividend and a resumption of buybacks. Other topics of interest will be his acquisition focus and a potential deemphasis of the $300 billion equity portfolio.

A third question is how, and if, he plans to fill out Berkshire's executive and investment ranks. Under Buffett, the company was known for operating with a tiny staff that oversaw the businesses Berkshire owned.

Write to Andrew Bary at andrew.bary@barrons.com

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February 04, 2026 14:07 ET (19:07 GMT)

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