Berkshire Hathaway: Buy, Sell, or Hold?

Do you believe in Buffett?

Warren Buffett is one of our most celebrated stock pickers, hence the decades-long popularity of his investment vehicle Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) . Scores of investors think the Buffett team's legendary acumen is enough to stay planted in the stock. Does that necessarily mean it's a buy now, though?

Big money and wide moats

Berkshire Hathaway essentially manages two different portfolios. The first is a collection of privately held businesses it controls, most notably the insurance company Geico.

The second is the one that gets the most attention, as it's Berkshire's massive and sprawling set of equity holdings. These days, the total market cap of this stock portfolio is nearly $386 billion , an immense size for what's basically an equity fund.

In line with Buffett's principles -- chief among which is his fervent belief in an economic moat -- Berkshire tends to plow its considerable resources into famous stocks that have done well over time.

Buffett and his lieutenants aren't afraid to make big, weighty bets. According to Berkshire's latest 13F quarterly portfolio update, more than 43% of its value consists of Apple stock. That company's vaunted ecosystem, from which it draws revenue from a number of interlocking sources, is a major part of its moat.

While Bank of America doesn't really have such a moat, it's illustrative of Buffett's knack for getting a great deal at the right time. A well-timed cash infusion provided from Berkshire in 2011 gave it not only a large stake in the bank's preferred shares but also a clutch of very attractively priced warrants, all of which were exercised.

These days, the Bank of America stake comprises just over 9% of Berkshire's equity portfolio.

Nos. 3 and 4 in terms of weight are two Buffett classics, American Express and Coca-Cola . It's hard to maintain a wide moat, but both companies have pulled off this tough feat for decades -- AmEx with its high-prestige credit cards, and pushy Coke as the brand most readily identified with soft drinks.

Berkshire holds a clutch of smaller stakes in other familiar companies. For example, the thriving oil and gas sector is well represented with positions in Chevron and Occidental Petroleum .

As with any equity portfolio, there are a few laggards in Berkshire's lineup. Buffett seems to love Kraft Heinz , so Berkshire has maintained a position in the uninspiring food company longer than any person or investment vehicle needs to.

Let's give credit where credit is due, however, as the investor recently announced Berkshire had shed its stake in the hot Hollywood mess that is entertainment company Paramount Global . He and his team aren't afraid to make a decisive exit when an investment isn't clicking.

The power of a good portfolio

While there are many elements that make Berkshire a standout stock, like other collections of assets we can make a buy/sell judgement largely on the strength of that equity portfolio. Does it have the potential to push Berkshire's value substantially higher?

I think it does. I like the mix of the holdings, plus for the most part the allocations are smart and well considered.

A 43% weighting for Apple is awfully heavy, but this is a company that has shattered market cap records. (It's now worth well over $3 trillion, thank you very much.) There are good reasons for this.

Management consistently delivers high profit margins, and while certain fundamentals have come up short, Apple has millions of devoted customers. Also, that ever-growing ecosystem is going to be a big help pushing the fundamentals higher. I can't imagine this company not winning, even over a long stretch of time.

We can tag Apple as a growth stock, then, while titles like Coca-Cola fit more into the income investor category. Coke's stock price isn't likely to explode, but it's a steady-as-she-goes investment that rewards investors over time, particularly since it's a Dividend King continually raising its shareholder payout.

Sprinkled among these are bets on previously under-the-radar or obscure stocks. Brazilian fintech Nu Holdings , for instance, has recently been on a general upward trajectory; Berkshire bought a chunk of it near the end of 2021.

Pricey, but well worth it

Berkshire, admittedly, isn't a cheap enterprise to own on either a per-share price or valuation basis. Even the Class B shares will set an investor back more than $400 apiece. The company's price/book exceeds 1.5; clearly, it's not a bargain stock.

Yet it's got one of the best equity mixes of any investment fund or big portfolio out there. It boasts enough timely plays, dividend payers, and wide-moat operators to produce meaningful fundamental -- and share-price -- growth. Management has also proven to be nimble and opportunistic with some of those sleeper plays.

In short, Buffett and his team remain ace investors with a gift for acquiring stocks at the right time. More importantly, they are good at holding on to winners and (for the most part) jettisoning underperformers. For me, then, Berkshire stock is unquestionably a buy.

American Express is an advertising partner of The Ascent, a Motley Fool company. Bank of America is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool recommends Kraft Heinz, Nu Holdings, and Occidental Petroleum. The Motley Fool has a disclosure policy .