Berkshire Hathaway stock price is set to rise but there are 2 key risks

Berkshire Hathaway (NYSE: BRK.A) stock price has done relatively well in the past decade. The shares have jumped by 190% in the past 10 years compared to the S&P 500 index that has jumped by over 150%. 

Is Berkshire Hathaway a good buy?

Berkshire Hathaway made headlines during the weekend after the company released its financial results and held its closely-watched annual meeting. There were several important news during the annual meeting.

First, the company announced that it will continue buying back its shares as it made no major investment during the quarter. The firm bought shares worth over $4.4 billion in the first quarter after repurchasing shares worth $2.6 billion in the same quarter in 2022. In all, Berkshire has reduced its outstanding shares to 1.47 million from 2019’s high of 1.67 million.

Second, the company’s financials showed that its insurance underwriting operating income came in at $911 million while its investment income came in at $1.97 billion. BNSF, the giant’s earnings came in at $1.25 billion while its controlled income rose slightly to $3.07 billion. Non-controlled businesses income was over $568 million.

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Third, Warren Buffett confirmed that Greg Abel will be the next CEO. Further, the company also confirmed that it was not interested in acquiring Occidental, an oil and gas company it has been accumulating before.

Berkshire Hathaway is a good investment in a period of turmoil in the market. For one, it has no exposure in the banking sector which has become highly vulnerable recently. The company also is benefiting from the rising interest rates, which are influencing its insurance business. High-interest rates are also providing free profits because the company has over $130 billion in cash. 

Still, the biggest risk for Berkshire is its concentration in Apple, which it holds about $151 billion. While Apple is a good company with growing dividends, I believe that this concentration is worrisome. Further, the company owns billions of dollars worth of Chevron and Occidental at a time when crude oil prices retreated, as I wrote here.

Berkshire Hathaway stock price forecast

The four-hour chart shows that the BRK share price has been in a strong bullish trend in the past few weeks. The stock managed to move above the key resistance point at $321.15, the highest point on January 11. It has now retested this level.

The shares remains above the 25-day and 50-day moving averages. Therefore, the shares will likely continue rising as buyers target the next key resistance point at $350.

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