Berkshire Hathaway Hit Record High Since Our Last Call
Berkshire Hathaway spiked 7% since we added our positions.
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In the midst of a tumultuous market landscape, one stock has managed to defy the odds and capture the attention of investors around the world - Berkshire Hathaway. As the S&P 500 index struggles, Warren Buffett's conglomerate is steadily inching closer to a historic milestone, poised to become the first public company to breach the $1 trillion market capitalization mark.
We have added position early June, shown by the blue arrow in the chart above. The price has spiked 7% since then.
What's Happening?
Berkshire's Class A stock has been on a remarkable run, rising 1.1% on Wednesday to $667,601 per share, and even hitting a new all-time high of nearly $670,000 earlier in the session. The Class B shares also saw a 1.2% gain, closing at $444.28. This impressive performance stands in stark contrast to the broader market, which saw the S&P 500 index decline by 1.4%.
Berkshire's current market value is estimated to be around $960 billion, according to Barron's calculations. To reach the coveted $1 trillion mark, the Class A stock would need to hit approximately $696,000 – a mere 4% increase from the current price. With over 1.437 million shares outstanding, the potential for Berkshire to cross this historic threshold is palpable.
This recent surge is not an isolated event. Berkshire's stock has gained around 9% so far this month, outpacing the broader market. In fact, the company's 23% gain so far this year has already outshone the S&P 500's 18% total return. When you look at the past decade, Berkshire's annualized return of 13.4% trumps the S&P 500's 13.1%.
Why Does it Matter?
Berkshire Hathaway's remarkable performance is a testament to the strength of its diversified portfolio, which includes a vast array of businesses and a $400 billion equity portfolio. Using a "look-through" approach that accounts for the profits of the companies in Berkshire's portfolio, the stock's price-to-earnings ratio is a more palatable 18 or 19, compared to the reported 23 times estimated 2024 earnings.
Moreover, the company's success is inextricably linked to the visionary leadership of Warren Buffett. The legendary investor has been steering Berkshire to new heights for nearly 60 years, since taking control of the company in 1965 when it was worth just $30 million. Now, Buffett's 15% stake in the company is worth a staggering $139 billion, a testament to his investment prowess.
As Buffett approaches his 94th birthday in August, the prospect of Berkshire hitting the $1 trillion market cap milestone would be the ultimate birthday present. It's a remarkable journey that has seen the company grow from a small textile manufacturer to a financial juggernaut, defying the odds and rewarding patient investors along the way.
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Disclaimer: This article constitutes the author’s personal views and is for entertainment and educational purposes only. It is not to be construed as financial advice in any form. Please do your own research and seek advice from a qualified financial advisor. From time to time, I have positions in all or some of the mentioned stocks when publishing this article. This is a disclosure - not a recommendation to buy or sell stocks.