Warren Buffett’s holding company Berkshire Hathaway (NYSE: BRK.A)(BRK.B -0.64%) reports earnings on Saturday, May 3. The company doesn’t conduct quarterly conference calls, but this quarter coincides with the annual meeting. There, we should get much more insight into Warren Buffett’s thinking.
I don’t expect any bombshells to revealed in Berkshire’s upcoming 10-Q. But there are still two reasons to invest before the weekend arrives.
1. Berkshire Hathaway is loaded with extra cash
Every investor is keenly aware of the volatility that has plagued the market so far in 2025. Several of the market’s biggest growth stocks entered correction territory this month, with consumer confidence hitting 45-year lows. For patient investors, the pullback could be a great opportunity to load up on discounted stocks. But there’s no saying when the volatility will end. If you’re looking to reduce risk in your portfolio, Berkshire should top your watchlist.
Last year, Berkshire’s cash hoard doubled to roughly $334 billion. Keep in mind that the company’s entire market capitalization is $1.1 trillion, meaning around 30% of Berkshire’s valuation is now cash and cash equivalents. Also, Buffett isn’t hoarding cash on purpose. “Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned,” Buffett told investors in his annual letter. So why is Berkshire loading up on cash? Only one explanation makes much sense: a lack of good deals.
Before the market pullback, the S&P 500 was trading at an astounding 30 times earnings. After the pullback, its valuation is down to around 27.7 times earnings. That’s still expensive, but it gives Buffett a little more room to make value accretive deals. But even if he sits on his growing cash pile, that insulates investors from additional market downturns. Theoretically it also limits upside, but not if there aren’t any good deals to be had.
Buffett mentioned in February that he was looking to add to his positions, especially his Japanese holdings after regulators lifted limits on foreign investment. If we get news that Buffett deployed some of its cash into his favorite holdings at a relative discount, we could see a small pop in Berkshire’s share price.
2. Berkshire’s portfolio companies can weather a big storm
It’s not just Berkshire’s cash pile that insulates investors downside. It’s also the type of companies that Buffett prefers to invest in. Last year, for instance, Buffett began secretly putting billions of dollars to work by accumulating Chubb stock. Chubb has a long history of strict underwriting, generating consistent profits from both its underwriting and its investment arm. The business has a lot of synergies with the rest of Berkshire’s insurance holdings, and its addition to Berkshire’s portfolio reduces the company’s overall exposure to volatility considering Chubb’s beta in recent years has averaged under 0.5.
To be fair, Berkshire is also disproportionately exposed to tech and financial services companies — both of which can see heavy declines during market corrections. But the companies it does own are financially stable with durable competitive advantages. If anything else, Berkshire could put its extra cash to work by upping its positions during periods of weakness — an advantage few investments funds have during times of turmoil.
Berkshire is a great stock to own during market corrections. And regardless of what occurs on May 3, these structural advantages likely won’t change. So yes, Berkshire looks like an attractive buy before earnings are announced. But shares are a buy for long term investors regardless of whether you buy this week or next.
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
