Berkshire Hathaway’s Class A stock (BRK.A) closed above $500,000 U.S., an all-time high, as the holding company controlled by Warren Buffett roars back with the economic recovery.
The Class A shares gained 1.3% yesterday (March 16), rising for a fourth straight day to close at $504,400 U.S., 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 stock market.
The rally in the stock pushed Berkshire’s market capitalization above $730 billion U.S., surpassing tech pioneer Meta Platforms (FB) in market value and becoming the only non-tech company on the list of 10 most valuable U.S. public companies.
Berkshire’s Class A shares are the conglomerate’s original offering, which 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 (BRK.B) in 1996 for one thirtieth of the Class A share price. 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 U.S. yesterday, rising a similar 12% this year.
The company’s operating earnings — which encompass profits made from the myriad of businesses owned by the conglomerate such as 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 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 gained more than $120 billion U.S. on paper.
Berkshire Hathaway has further supported the stock by repurchasing a record $27 billion U.S. of its own shares in 2021 as Warren Buffett 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.