Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) is arguably one of the safest investments there is. The company holds over $80 billion in cash and is well diversified across many different industries. All the cash generated from operations is reinvested into the company. Over the years, Berkshire has compounded book value at a double-digit rate per annum. Unlike bonds, which are considered safe but lack any potential for capital gains (when brought at issue), an investment in Berkshire is safe with upside optionality.
However, the single biggest issue stopping investors from buying Berkshire today appears to be the company’s key man risk. Warren Buffett (Trades, Portfolio) is not a young man, it is likely that at some point within the next decade he will be forced to step down as Berkshire’s leader. What happens to Berkshire after Buffett leaves the business is difficult to predict. It is widely believed that, for the most part, the business will continue as normal. Continue Reading »