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- Motley Fool Australia chief investment officer Scott Phillips names Berkshire Hathaway as international stock he plans never to sell
- Berkshire’s valuable investment portfolio will remain long after Buffett leaves
- With nearly US$150 billion in cash, Berkshire Hathaway has plenty of room for the future
Investing for the long term can be one of the best ways to take advantage of compounding. For some investors, that might mean holding a stock indefinitely, with no plans to sell. Such is the case with an international stock that The Motley Fool Australia chief investment officer Scott Phillips says he intends to hold forever.
It takes a particular kind of business to find a place as a potential “permanent” investment in any portfolio. First, it must be a company with a proven track record of performance. Second, it needs resources to weather the inevitable storms over decades. These two factors allow shareholders to sleep well at night while holding for a long time.
That being said, let’s open the hood on this international stock that Phillips has been hiding for the long haul.
The international business that has settled into the Phillips portfolio is Berkshire Hathaway Inc. (NYSE: BRK.B). This multinational conglomerate has proven its ability to outperform the market time and time again over the years, with the great Warren Buffett at the helm.
For those unaware, Berkshire Hathaway wholly owns many companies, including GEICO and Duracell. Additionally, the Nebraska-based conglomerate holds a slew of investments on its balance sheets. These include substantial holdings in Apple Inc. (NASDAQ:AAPL), Coca-Cola Co (NYSE: KO), Bank of America Corp (NYSE: BAC), and American Express Company (NYSE:AXP).
This diversity offers a level of risk reduction of individual industries. On top of that, Berkshire Hathaway is incredibly profitable. In the past financial year, the conglomerate made a profit of $86 billion on revenue of $268.7 billion.
The elephant in the room is what happens to Berkshire Hathaway (and its stock price) when the legendary Buffett leaves. Addressing the potential risk for this international stock, Phillips said:
Buffett won’t be there at some point. Whether for natural causes or whether he chooses to leave the company, someone will take over. And yes, the stock price can even be volatile when this happens. Buffett is a great asset, but when he leaves the scene, one way or another, the company will retain all of those holdings and all of those businesses going.
Additionally, the conglomerate has plenty of financial ammunition up its sleeve to navigate the future. At the end of September 2021, Berkshire Hathaway had $149.2 billion of cash and cash equivalents on its balance sheet.
Berkshire Hathaway stock price closed at just over US$321 overnight on the New York Stock Exchange. Just 20 years ago, in January 2002, it was trading at around $50.
Berkshire Hathaway as part of a portfolio
Phillips reveals Berkshire Hathaway is one of his ‘forever’ stocks during podcast with National Australia Bank Ltd (ASX:NAB) Super Director of Self-Directed and Investor Behavior, Gemma Dale. In this conversation, Phillips describes the US conglomerate as having a “bedrock” position in conjunction with other equity investments.
Moving away from international equities, the broker also named 5 ASX stocks that look attractive this year.