Markets

Berkshire Hathaway Closes at a Record Above $500,000 a Share as Buffett's Conglomerate Roars Back

Andrew Harnik | AP

Berkshire Hathaway class A shares achieved a key milestone Wednesday, hitting an all-time closing high of half a million dollars as Warren Buffett's multifaceted conglomerate fires on all cylinders during the economic recovery.

The class A shares gained 1.3% Wednesday, rising for a fourth straight day to close at $504,400 — its first-ever close above the half-million dollar threshold. Shares of the Omaha-based company have rallied more than 11% this year, significantly outperforming the broader market.

"I think a rotation into value names, coupled with Berkshire's exposure to the energy and utility space ... and investors' enthusiasm for Berkshire's aggressive share buybacks drove the shares' performance," said Cathy Seifert, a Berkshire analyst at CFRA Research.

The rally in the stock pushed Berkshire's market cap above $730 billion, surpassing tech pioneer Meta Platforms in market value and becoming only non-tech companies on the list of 10 most valuable U.S. public companies.

Berkshire's Class A shares are the conglomerate's original offering, which rapidly ballooned over time in price to eventually become one of the most expensive single stocks on Wall Street. Buffett has said he will never split the Class A shares because he believes the high share price will keep and attract more long-term, quality-oriented investors.

Still, in response to demand for a cheaper option among small investors, Berkshire issued convertible Class B shares in 1996 for one thirtieth of Class A share price initially. The affordable share class allows investors to purchase a piece of the company directly instead of buying a fraction of a share through unit trusts or mutual funds.

Berkshire's Class B shares closed at $336.11 apiece on Wednesday, rising a similar 12% this year.

The company's operating earnings — which encompass profits made from the myriad of businesses owned by the conglomerate like insurance, railroads and utilities — jumped 45% from a year ago in the fourth quarter as businesses continued to roar back to life from the pandemic economic slowdown.

A slew of Buffett's stock holdings are also paying off handsomely, from Apple to big banks and Japanese trading houses. The 91-year-old investing legend's massive bet on Apple, which makes up 40% of Berkshire's equity portfolio, has made more than $120 billion on paper.

Meanwhile, Berkshire has further supported the stock by repurchasing a record $27 billion of its own shares in 2021 as the "Oracle of Omaha" found few opportunities externally. The conglomerate hasn't pulled off any big acquisitions in recent years so has consistently bought back its own shares with its massive cash pile.

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