The equity bull market that began more than a decade ago is likely to end sometime in the near to medium term, and some economic indicators are starting to point to a potential recession in the U.S. economy. We are highlighting wide-moat-rated Berkshire Hathaway (BRK.A)/(BRK.B) as a long-term investment idea that is likely to hold up better than most companies in a downturn, especially given its close to $100 billion in dry powder that could be committed to investments, acquisitions, and share repurchases.
We view Berkshire Hathaway’s decentralized business model, broad business diversification, high cash generation capabilities, and unmatched balance sheet strength as providers of opportunities that might elude other companies, as well as of some downside protection in any potential downturn. It is these advantages, in particular, that should allow Berkshire’s book value per share to continue to grow at a high-single- to low-double-digit rate in the near to medium term, comfortably above our estimate of the company’s cost of capital.
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Greggory Warren does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.