Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) needs no introduction.The Warren Buffett-managed conglomerate has a stellar track record of growing value for its shareholders. It can make a great long-term investment.

Here are three reasons investors should buyBerkshire Hathaway stock hand over fist right now.

Similarly strong returns with less volatility

Berkshire Hathaway isn't the fastest-growing company in theworld. However, it still has a knack for delivering strong returns for its investors. Here's how Buffett's company compares to theS&P 500 in recent years:

Data source: Ycharts. Data as of April 19, 2024.

As that table shows, Berkshire Hathaway has roughly met or exceeded the S&P 500's total return ineach of the last one-, three-, five-, and 10-year periods. While the returns outsideof the past three years haven't beentruly market-smashing, the company has largely kept pace with the broader market's strong showing over the past decade.

However, what's worth pointing out is that Berkshire has delivered similarly strong returns compared to the broader market with lessvolatility as measured bybeta:

BRK.B Beta (1Y) data by YCharts

With an average beta of less than 0.9, Berkshire Hathaway has been about 10% less volatile than the S&P 500 (1.0 beta). That means if the S&P 500 plunges 10%, Berkshire's stock would likely fall by less than 9%. That lower volatility can be important for investors who want to earn market returns with less risk in the form of volatility.

A strong and diversified portfolio of businesses

In many ways, Berkshire Hathaway is a high-quality investment fund. The company hasa large portfolio of wholly owned businesses and an investment portfolio of publicly traded stocks.

The company's operating businesses are:

• Insurance and reinsurance: This segment features GEICO, a collection of independently managed insurers, and reinsurance businesses like General Re.
• Railroad business: Burlington Northern Santa Fe
• Utilities and energy businesses: The company owns a large diversified energy company (Berkshire Hathaway Energy) and Pilot Travel Centers.
• Other segments: Berkshire owns a variety of manufacturing, service, and retail businesses.

In addition, the company holds an extensive portfolio of publicly traded stocks, ledby:

• Apple: It held roughly $150 billion of the technology stock (41.2% of its investment portfolio).
• Bank of America: Berkshire owned over $38 billion of the bank stock (10.5%).
• American Express: Buffett's company owned nearly $35 billion of the credit card company's shares (9.6%).
• Coco-Cola: It owned almost $24 billion of the beverage stock (6.6%).
• Chevron: Berkshire held over $20 billion of the oil stock (5.5%).

Berkshire's investment portfolio held over $364 billion inshares of publicly traded companies, with meaningful exposure to the technology, financial, andoil industries.

The company focuses on owning and investing in high-quality companies in sectors it believes will grow shareholder value over the long term. It historically invests in businesses that grow their earnings at above-average rates. They use that cash flow to grow the business and return money to shareholders.

A massive cash war chest

Berkshire's operating companies supply it with retained earnings, while its investment portfolio provides it with dividend income. These dual sources give Berkshire a growing stream of free cash flow. That money has been piling up on its balance sheet in recent years.

The company has a massive cash position, reaching a record $168 billion at the end of last year. That was up from $157 billion at the end of the third quarter and well above the $150 billion level Buffett has said is difficult to justify keeping on the balance sheet (and the roughly $35 billion analysts believe it requires to operate its insurance businesses). The companycurrently invests most of that money intoT-bills that generate interest income.

Warren Buffett and his team can use its cash position to create shareholder value. They can buy new operating companies, invest in publicly traded stocks, and repurchase Berkshire's shares when they trade at a compelling valuation. Many analysts speculate that Buffett is waiting for a meaningful market downturnso that he can find compelling opportunities to deploy his cash by acquiring strong operating businesses at a better price. In the meantime, Buffett and company are selectively deploying cash into buying stocks (the company has been adding to itsoil stock position andJapanese trading houses in the past year) and repurchasing Berkshire's shares.

Market returns with less risk (and compelling upside)

Berkshire Hathaway has historically been a great investment.Now looks like as good a timeto buy as any. Berkshire should deliver returns as good as the S&P 500, if not better, with less volatility because of its focus on owning high-quality operating companies and publicly traded stocks. Meanwhile, it offers compelling upside potential following the next downturn because that couldprovide Berkshire with the opportunity to put more of its massive cash position to work. These factors make Berkshire a no-brainer stock to buy right now.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. American Express is an advertising partner of The Ascent, a Motley Fool company. Matt DiLallo has positions in Apple, Bank of America, Berkshire Hathaway, Chevron, and Coca-Cola. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool has a disclosure policy.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.

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