Warren Buffett’s Berkshire Hathaway climbed past a market valuation of $1 trillion Wednesday, joining a small club of mammoth companies dominated by tech firms such as Nvidia and Microsoft.
Berkshire’s shares rose 0.7 per cent Wednesday, bringing their gain this year to more than 28 per cent and adding more than $200 billion to the company’s market capitalization — a rally that has outpaced the broader market’s rise. The S&P 500 is up 17.2 per cent for the year.
Berkshire owns and controls firms such as insurance giant GEICO and Burlington Northern Santa Fe railroad, and holds stakes in many blue-chip companies such as Apple and Coca-Cola. The conglomerate’s ascent further entrenches Buffett’s reputation as one of the most successful investors of all time, with Berkshire averaging a gain of about 20% a year since he took the helm in 1965.
Reaching a $1 trillion market valuation is “a big deal,” said Kevin Heal, an analyst who covers the company for Argus Research.
Every year, Berkshire holds its shareholder meeting in Omaha, Nebraska, where tens of thousands of people pack an arena to hear Buffett’s folksy investing wisdom. This year’s meeting, in May, was the first without Charles T. Munger, the firm’s vice chairman, who died in November at age 99.
Buffett, who turns 94 Friday, and Munger built Berkshire’s fortune by ignoring fads and seeking undervalued companies to invest in for the long term.
Berkshire’s big bets on Apple, as well as financial companies like Bank of America and American Express, have paid off handsomely this year.
Apple has risen 18 per cent since January, according to filings. Berkshire is also sitting on more than $270 billion in cash.
That might explain why Berkshire has managed to outpace the S&P 500 this year, said Greggory Warren, an analyst who covers the company for Morningstar.
“I, unfortunately, don’t have an answer as to why it is up as much as it is, other than that perhaps some market participants weren’t buying into the tech-driven rally and wanted the downside protection of a Berkshire if things went south, or some thought Berkshire would benefit from AI through its large Apple stake,” he said.
Published 29 August 2024, 05:44 IST