What Helped Warren Buffett’s Berkshire Hathaway Hit $1 Trillion Market
On August 28, Warren Buffett's company Berkshire Hathaway officially reached a market value of $1 trillion. This makes it the first non-tech company in the US to achieve this impressive goal.
Berkshire's stock has gone up over 27% in 2024, nearly twice as much as the S&P 500 in the same period. Berkshire hit this notable milestone just two days before Chairman Warren Buffett turns 94 years old.
FactSet reports that Berkshire's stock price increased by 1.2% on August 28, which pushed its market value above $1 trillion.
Unlike the other six companies in the trillion-dollar club (Apple, Nvidia, Microsoft, Alphabet, Amazon, Meta), Berkshire Hathaway focuses on the "real economy" instead of tech. Warren Buffett's company owns BNSF Railway, Geico Insurance, and Dairy Queen fast food chain.
Buffett took control of Berkshire, a struggling textile company, in the 1960s. He turned it into a huge "empire" involved in many areas including insurance, railways, retail, and energy. The company has a balance sheet considered "unmatched" with a huge "mountain" of cash.
Recently, Warren Buffett is famous for never predicting the market and warning investors not do do so. But his recent moves are a warning to those who follow him. Many experts and analysts believe he sees some problems in the economy and market valuations.
Berkshire Hathaway joining the trillion-dollar club is a big deal. It shows that even old-fashioned businesses can reach huge values if managed well. Buffett's success comes from smart investments and running companies efficiently. His recent caution suggests he thinks the market might be too high right now.
Berkshire invests most of its cash in short-term Treasury bonds. The company holds more bonds than even the US Federal Reserve, with a value of $234.6 billion at the end of the second quarter.
Berkshire's Class A stock is one of the most expensive on Wall Street. Today, each share sells for over 68% more than the average price of a house in the US.
The high stock price is because Warren Buffett never split the stock. He believes the high price attracts and keeps long-term investors who focus on quality. In fact, many Berkshire shareholders are said to use the company's stock as a form of savings.
However, Berkshire still issued Class B shares in 1996 at a price of 1/30 of Class A shares, to serve small investors.
According to CNBC
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