Editor’s note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. Leveraged and inverse ETFs pursue daily leveraged investment objectives, which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. Investing in the Funds is not equivalent to investing directly in BRK.B.
Berkshire Hathaway, Inc. (Ticker: BRK.B) is expected to report earnings in late February and traders are watching closely. Warren Buffett’s conglomerate has long been a bellwether for the broader market, offering insight into economic trends, consumer demand, and investment opportunities across multiple industries.
While many investors focus on tech stocks these days, Berkshire’s holdings in financials, industrials, and energy make it a key stock to watch—especially with recent volatility* in these sectors.
With Berkshire’s cash reserves at an all-time high and recent moves in its portfolio, traders have plenty to consider when evaluating the stock’s next move. Here’s a breakdown of key catalysts—both bullish and bearish—heading into earnings, which are expected to cross around February 28, according to Zacks Investment Research.
Below is a daily chart of BRK.B, as of February 5, 2025.
Source: StockCharts.com, February 5, 2025.
Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.
The performance data quoted represents past performance. Past performance does not guarantee future results.
Bullish Catalysts: Can Berkshire’s Fortress Balance Sheet Fuel New Opportunities?
- Strategic Investments Signal Confidence in Key Sectors
Berkshire Hathaway’s recent stock moves suggest Buffett still sees opportunity, even amid uncertainty.
- Berkshire increased its stake in Sirius XM Holdings (Ticker: SIRI), now owning over 35% of the company—a notable vote of confidence in media and subscription-based services, according to MarketWatch.
- Buffett continues to build his position in Occidental Petroleum (Ticker: OXY), now owning over 28% of the company. With energy demand remaining strong, this investment highlights Berkshire’s long-term bullish stance on oil, The Motley Fool reports.
- Berkshire remains heavily invested in financials, including Bank of America (Ticker: BAC) and American Express (Ticker: AXP), showing Buffett’s continued confidence in the sector despite economic uncertainty.
2. Cash Pile Hits Record Levels—Dry Powder for Acquisitions?
Berkshire’s famous cash reserves have surged to over $325 billion, giving the company massive flexibility to make acquisitions, increase buybacks, or capitalize on market dislocations, according to AP News.
- With valuations in some industries declining, Buffett has hinted at making a “big move” if the right opportunity presents itself, according to Barron’s.
- Traders may speculate that Berkshire could deploy capital into underperforming banks, industrials, or even tech.
3. Operating Businesses Are Driving Profits
Beyond its investment portfolio, Berkshire’s core businesses—insurance, railroads, and utilities—continue to perform well.
- Despite cutting over 4,000 jobs in 2023, Berkshire is still on track for a record operating profit this year, Reuters reports.
- Its insurance division remains a major profit driver, even as natural disaster risks rise.
- Berkshire’s industrial and energy holdings, including BNSF Railway and Berkshire Hathaway Energy, are still generating strong cash flow.
Bearish Catalysts: Signs of Caution as Berkshire Trims Stakes and Legal Risks Loom
- Buffett’s Portfolio Shuffle
Berkshire’s latest 13F filing showed major reductions in Apple, Inc. (Ticker: AAPL) and Bank of America holdings, raising concerns about its confidence in these key sectors, according to AP News.
- Selling Apple shares after years of steady accumulation could signal concerns about growth or valuation.
- Buffett’s reduction in Bank of America may indicate caution about the financial sector’s ability to navigate high interest rates and regulatory pressures.
2. Legal Challenges Could Weigh on Sentiment
Berkshire is facing a $1.78 billion judgment against its real estate subsidiary, HomeServices of America, for inflating* commission rates, Reuters reports.
- While this lawsuit isn’t a major financial threat to Berkshire, it raises reputational risks and questions about regulatory challenges in its non-core businesses.
- Investors may also be watching for any impact on Berkshire’s real estate holdings or insurance underwriting due to regulatory scrutiny.
3. Leadership Transition Uncertainty
At 95 years old, Warren Buffett’s leadership longevity is always a topic of discussion.
- Greg Abel is widely expected to take over as CEO, but investors may wonder if Berkshire can maintain its disciplined investment approach without Buffett’s direct oversight, according to Barron’s.
- If Berkshire’s board signals new strategic shifts under Abel, traders will be keeping tabs for clues about potential changes to capital allocation or investment strategy.
The Bigger Picture: Berkshire as a Non-Tech Trade in a Shifting Market
While many traders focus on glamorous tech stocks and artificial intelligence (AI)-driven companies, Berkshire’s earnings offer an opportunity to trade a diversified, cash-rich company with exposure to multiple industries.
- Financial stocks have faced pressure recently due to interest rate uncertainty, and Berkshire’s exposure to banks and insurance could be a key factor in its performance.
- Energy and industrials are other crucial sectors for traders to watch, especially given Berkshire’s stake in Occidental Petroleum and its strong railroad and utility businesses.
Berkshire: A Stock to Watch Ahead of Earnings
Berkshire Hathaway’s earnings calls are always a market-moving event, with Buffett’s outlook on the economy offering insights far beyond just one stock.
With record cash reserves, a shifting portfolio, and strong business fundamentals, traders have reasons to watch both the bullish and bearish case for Berkshire in the coming weeks. Whether traders see BRK.B as a fortress of stability or a company at an inflection point, they have tools to take advantage of potential moves in either direction.
Will Berkshire’s balance sheet strength push the stock higher, or will Buffett’s caution keep it from breaking out? Traders will have their answer soon.
Playing the Bull or Bear Side
For traders looking to position around Berkshire Hathaway’s earnings, leveraged ETFs like Direxion Daily BRKB Bull 2X Shares (Ticker: BRKU) and Direxion Daily BRKB Bear 1X Shares (Ticker: BRKD) offer a tactical way to trade short-term volatility in either direction. BRKB and BRKU seek daily investment results, before fees and expenses, of 200% and 100% of the inverse (or opposite), respectively, of the performance of the common shares of Berkshire Hathaway Inc.
*Definitions and Index Descriptions
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
The Funds have derived all disclosures contained in this document regarding Berkshire Hathaway Inc. from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Berkshire Hathaway Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Berkshire Hathaway Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Berkshire Hathaway Inc. could affect the value of a Fund’s investments with respect to Berkshire Hathaway Inc. and therefore the value of the Funds.
Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. Each Fund is non-diversified and includes risks associated with a Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning.
Leverage Risk – The Bull Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation with BRK.B and may increase the volatility of the Bull Fund.
Daily Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with BRK.B and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to BRK.B is impacted by BRK.B’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to BRK.B at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to BRK.B increases on days when BRK.B is volatile near the close of the trading day.
Daily Inverse Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with BRK.B and therefore achieve its daily inverse investment objective. The Bear Fund’s exposure to BRK.B is impacted by BRK.B’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to BRK.B at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to BRK.B increases on days when BRK.B is volatile near the close of the trading day.
Berkshire Hathaway Inc. – BRK.B faces risks associated with the risks associated with companies in the financial services sector and the insurance industry. Additionally, Berkshire Hathaway Inc. faces risks associated with: terrorism impacting its operating businesses; cybersecurity events; geopolitical events that cause loses to its business and the value of securities it owns.
Financials Sector Risk — Performance of companies in the financials sector may be materially impacted by many factors, including but not limited to, government regulations, economic conditions, credit rating downgrades, changes in interest rates and decreased liquidity in credit markets.
Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Industry Concentration Risk, Market Risk, Indirect Investment Risk, and Cash Transaction Risk. Additionally, for the Direxion Daily BRKB Bear 1X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.