Warren Buffett attends the Berkshire Hathaway annual shareholder meeting in Omaha, Nebraska.
David A. Grogan | David A. Grogan CNBC
Warren Buffett’s Berkshire Hathaway On Wednesday, the market capitalization reached $1 trillion, becoming the first non-tech company in the United States to reach this milestone.
Shares of the Omaha-based conglomerate are up more than 28% in 2024, well ahead of the S&P 500’s 18% gain. Just two days before the “Oracle of Omaha”‘s 94th birthday, the U.S. dollar passed the $1 trillion threshold.
According to FactSet, the stock rose 1.2% on Wednesday, hitting a high of $699,440.93, surpassing the $1 trillion mark.
Unlike the other six companies in the trillion-dollar club (Apple, Nvidia, Microsoft, Alphabet, Amazon, Meta), Berkshire Hathaway is known for its focus on the old economy, as BNSF Railway, Geco Insurance and dairy queen. (Though its outsized position in Apple has helped drive recent gains.)
Buffett controls Berkshire; The textile business ran into trouble in the 1960s and transformed the company into a vast empire spanning insurance, railroads, retail and energy, with an unparalleled balance sheet and cash fortress.
Buffett has been in defensive mode lately; Sold a ton of stock, including half of Apple shareswhile increasing Berkshire’s cash reserves to a record $277 billion at the end of June.
Buffett famously never times the market and advises others not to try to do so either, but these recent moves have set off alarm bells for some of his followers on Wall Street, who believe Buffett sees something in the economy and markets that he doesn’t like. valuation of things.
Berkshire invests most of its cash in short-term Treasury bills, and its holdings of such securities (worth $234.6 billion at the end of the second quarter) have That’s more than the Fed has.
So it’s hard to tell why investors are awarding $1 trillion to Berkshire today, whether they’re betting on the U.S. economy and that Buffett’s vast enterprise will benefit if it continues to grow, or whether they’re viewing Berkshire as a bastion of cash, facing Create stable income despite the uncertain macro environment.
The group also began selling aggressively Bank of America In mid-July, more than $5 billion worth of bank stocks were sold off. Buffett bought Bank of America’s preferred shares and warrants after the 2011 financial crisis, bolstering confidence in the bank that was reeling from losses on subprime mortgages.
strong profits
After Berkshire Hathaway reported its latest strong second-quarter earnings, UBS analyst Brian Meredith raised his profit forecast for 2024 and 2025 for two reasons: increased investment income and the inclusion of GEICO in The underwriting performance of the insurance group within the company has improved. Due to the impact of the epidemic, insurance stocks have continued to increase their prices, and insurance stocks have risen sharply this year.
Meredith expects Berkshire Hathaway’s market value to be well over $1 trillion, raising its 12-month price target for its Class A shares to $759,000, nearly 9% above Wednesday’s levels.
“We continue to believe BRK shares are attractive in an uncertain macro environment,” he wrote in a note earlier this month.
high price tag
Berkshire Original Class A Shares Has one of the highest price tags on Wall Street. Today, each piece sells for more than U.S. median home price
Berkshire Hathaway A shares, long term
This is because Buffett has never split stocks and believes that high stock prices attract and retain more long-term, quality-focused investors. this Ben Graham Many Berkshire shareholders use their shares as savings accounts, Disciple said.
Nonetheless, Berkshire released Class B shares In 1996, it was issued at a price equivalent to one-thirtieth of Class A shares to satisfy the needs of small investors who wanted a piece of Buffett’s performance.
