Berkshire Hathaway Inc. (BRK.B): Want to Invest like Buffett?

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Looking at the metrics, Berkshire Hathaway’s class B shares have a beta of .29, which is very low; Berkshire’s stock has fared better since the start of 2008 (up 46%) compared to its closest competitors, namely The Allstate Corporation (NYSE:ALL) (up 32%), RenaissanceRe Holdings Ltd. (NYSE:RNR) (up 37%), and RLI Corp (NYSE:RLI) (up 10.4%).  Arch Capital Group Ltd. (NASDAQ:ACGL), one of the only peers to outperform Berkshire, is another property and casualty insurance provider up almost 95% over the same period.  This group of stocks has provided investors impressive returns over the past half-decade, and performance should only get better as the economic climate improves.

Looking at Berkshire, there is nothing remotely concerning about the company’s financial health.  From a valuation standpoint, a PEG ratio of 1.46 is respectable given the low-growth nature of Berkshire’s businesses. The company’s return on equity for the past 12 months has been 7.73%, above the industry average of 7.3%; their profit margin of 8.9% is also above the industry average of 8.5%.

Worth noting is that Berkshire’s return on equity is markedly lower than Allstate (13%), RenaissanceRe (19%), Arch Capital Group (15%), and RLI (12%). Even more impressive for these four companies is that each has a debt/equity ratio less than 0.3, with RLI, RenaissanceRe, and Arch Capital Group actually closer to 0.1.  Berkshire, however, is involved in some more asset-intensive businesses, in addition to property and casualty insurance.  Buffett’s baby has a .34 debt/equity ratio, closer to that of Allstate.

To conclude, the simple idea I’m suggesting is that you can have peace of mind knowing that Warren Buffett is looking over part of your portfolio while you scour around for the next big winner.  As investors, we understand the importance of not leaving cash idly sitting around.  If you’re struggling with ideas on where to put some of your investment cash in 2013, Berkshire Hathaway is a low-risk way to capitalize on long-term growth.

For more related coverage, continue reading below:

Why Does Buffett Love IBM?

Should The Oracle Have Bought Deere?

Is It Time to Monkey Warren Into Coca-Cola?

Disclosure: I am long BRK.B

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