For the first time ever, Class A stock at Berkshire Hathaway is riding at a record high of $504,400 after climbing more than 10% this year.
Class A shares of investment conglomerate Berkshire Hathaway (NYSE: BRK.A) have hit a new price record by closing above $500K for the first time.
The world’s most expensive stock gained 1.3% on Wednesday, March 16th, representing a rise for the fourth successive day. This year, the Warren Buffett-led company has performed well despite an unstable market. The company has rallied over 11% in 2022 and is significantly outperforming the market.
Berkshire’s Class A stock can command a large share price because it has never split, as Buffett deliberately chooses not to go that route. The company’s CEO believes that the stock’s high admission price helps attract long-term investors. In addition, Buffett has a long-standing belief that the nature of Berkshire’s Class A stock also discourages speculation, which can undermine stock value.
Weighing in on the Berkshire Class A shares record level, Berkshire analyst at CFRA Research Cathy Seifert said:
“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.”
Berkshire Hathaway Stock Price Record Also Increases Market Value of the Conglomerate Holding Company
The new lofty stock price tag propelled Berkshire’s market cap past $730 billion. With this, the multinational conglomerate holding company now has a greater market value than tech-focused Meta Platforms. In fact, Berkshire Hathaway is currently the only non-tech company on the list of 10 most valuable US public companies.
Although Berkshire’s class A stock is beyond the purchasing power of most individuals, the firm offers far cheaper alternatives. Small-time investors can still be privy to Buffett’s investing acumen via the purchase of Berkshire Hathaway Class B shares. Currently trading at around $335 a pop, the Class B shares were created back in 1996, about 12 years after the Class A variety.
The Class B shares were split 50-to-1 about 12 years ago to facilitate Berkshire’s acquisition of Burlington Northern Santa Fe, one of the largest freight railroads in North America.
Berkshire’s operating earnings, including profits accrued from the conglomerate’s disparate businesses, surged 45% YoY in the fourth quarter. This came amid a general upswing in overall business activities following the Covid pandemic economic stagnation.
Additionally, several Berkshire investments, such as Apple and some banking giants, are currently reaping massive dividends. For instance, Apple constitutes 40% of Berkshire’s equity portfolio and has earned more than $120 billion. The 5% Apple stake Berkshire acquired in 2018 for $36 billion was worth $160 billion as of January. At the time, James Shanahan, Berkshire analyst at Edward Jones, lauded the investment prowess of the Omaha-based company, saying:
“Without a doubt, it is one of the strongest investments that Berkshire has made in the last decade.”
Apart from being CEO, Buffett also serves as chairman at Berkshire.
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