Berkshire Hathaway Surpasses $1 Trillion Market Value for the First Time, Signaling Strong Investor Confidence

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Berkshire Hathaway Inc. (BRKa.N) achieved a significant milestone on Wednesday, as its market value closed above $1 trillion for the first time in history. This landmark reflects the robust investor confidence in the conglomerate, which has been built by Warren Buffett over nearly six decades. Many view Berkshire Hathaway as a barometer for the broader American economy.

With this achievement, Berkshire Hathaway joins a prestigious group of seven U.S. companies that have reached or surpassed the $1 trillion market value threshold. This elite group includes technology giants such as Apple (AAPL.O), Nvidia (NVDA.O), Microsoft (MSFT.O), Alphabet (GOOGL.O), Amazon.com (AMZN.O), and Meta Platforms (META.O), demonstrating the company’s significant stature within the global market.

On Wednesday, Berkshire’s Class A shares rose by 0.7%, closing at $696,502.02. Similarly, the more commonly traded Class B shares increased by 0.9%, reaching $464.59. Warren Buffett, who is set to turn 94 this Friday, has been at the helm of the Omaha, Nebraska-based conglomerate since 1965. Under his leadership, Buffett transformed Berkshire from a struggling textile manufacturer into a diversified conglomerate with substantial interests in various industries, including insurance through Geico, railroads with BNSF, energy with Berkshire Hathaway Energy, and consumer goods with brands such as Brooks Running, Dairy Queen, and Ginsu Knives.

In the first half of this year, Berkshire’s operating businesses generated an impressive profit of $22.8 billion, marking a 26% increase compared to the same period in 2023. Despite selling tens of billions of dollars worth of its shares in major companies like Apple and Bank of America earlier this year, Berkshire’s stock portfolio remains substantial. The sales have contributed to a surge in the company’s cash reserves, primarily held in U.S. Treasury bills, which reached $276.9 billion as of June 30. Additionally, Berkshire has recently reduced its share repurchases.

Steve Check, president of Check Capital Management in Costa Mesa, California, praised Buffett’s approach, noting, “Buffett built Berkshire in a systematic, relatively low-risk manner. As a huge conglomerate, it will always have parts performing well.” The $1 trillion valuation is based on Berkshire’s outstanding shares: 553,234 Class A shares and 1,325,192,508 Class B shares as of July 23.

Since Buffett took charge in 1965, Berkshire Hathaway shares have appreciated more than 5,600,000%, reflecting an average annual gain of approximately 20%. This performance is nearly double the annualized return of the Standard & Poor’s 500 Index, including dividends. On Wednesday, there was no single factor driving the share price increase, although Berkshire’s Class A shares have risen by 28% this year, compared to a 17% increase in the S&P 500 excluding dividends.

Buffett remains a major shareholder, owning over 14% of Berkshire Hathaway’s shares, despite having donated more than half of his holdings to charity since 2006. According to Forbes, his net worth is approximately $146 billion, making him the world’s sixth-richest individual.

Steve Check also shared a personal anecdote, mentioning he purchased 100 Berkshire Class B shares for his grandson Zealand on August 16, the day he became a grandfather. He advised, “Investors should certainly not jump in solely because the market cap hit $1 trillion. The stock may be as fully priced as it has been since before the 2008 financial crisis. It remains a solid investment for those with a long-term perspective.”