Feb 26, 2024,10:19am EST
Shares of Berkshire Hathaway, the conglomerate led by centibillionaire legendary investor Warren Buffett, surged to their highest level ever on Monday following the firm’s announcement of record earnings over the weekend. However, Buffett acknowledged that the ballooning size of Berkshire Hathaway may indicate the end of its market-beating streak.
KEY FACTS Berkshire Hathaway’s Class A shares saw a more than 2% increase, reaching as high as $647,039 shortly after the market opened. At the same time, its “baby” Class B shares also hit a record price of $430.
The rally marked Berkshire’s best day in terms of low volatility since August. This surge followed Berkshire’s report of its highest-ever annual operating profit of $96 billion and its largest-ever cash hoard of $168 billion.
Buffett lamented in his annual letter to shareholders that the days of “eye-popping performance” for Berkshire may be over, citing the company’s size and market concentration. However, Berkshire’s history of consistently outperforming the broader market over the long term remains impressive.
Berkshire has delivered an 18% year-to-date return, outpacing the S&P 500’s 7% gain. Over longer time frames, Berkshire’s returns become even more remarkable: it has achieved a 271% return over the last decade and a staggering 50,799% surge over the last 40 years, compared to the S&P’s respective gains of 232% and 4,213%, according to FactSet data.
Berkshire Has Long History Of Beating Market
| Period | Berkshire’s Return | S&P 500’s Return |
|---|---|---|
| Year-to-date | 18% | 7% |
| 12 months | 37% | 30% |
| 5 years | 110% | 98% |
| 10 years | 271% | 232% |
| 20 years | 570% | 559% |
| 30 years | 4012% | 1837% |
| 40 years | 50799% | 4213% |
S&P 500 returns include reinvested dividends. Source: FactSet
BIG NUMBER Berkshire’s market capitalization hit an unprecedented mark on Monday, reaching almost $930 billion. This figure stands in stark contrast to the company’s humble beginnings when Warren Buffett, at the age of 34, purchased Berkshire for roughly $20 million in 1965, with its class A shares trading at $19.
KEY BACKGROUND Before Warren Buffett’s transformative leadership, Berkshire was a little-known textile manufacturer based in western Massachusetts. Under Buffett’s guidance, the company evolved into a vehicle that the public closely tracks to follow the stock picker’s investments. Saturday marked Berkshire’s first annual report in nearly five decades without Charlie Munger, Buffett’s longtime lieutenant who passed away in November at the age of 99.
Among the privately-owned companies majority-owned by Berkshire are insurance giant Geico, ice cream chain Dairy Queen, and battery maker Duracell. However, Berkshire is most renowned for its nearly $400 billion portfolio of investments in public companies, which is managed by Buffett. Apple stands out as Berkshire’s largest holding, with Berkshire’s $165 billion stake in the iPhone maker accounting for almost half of its portfolio. Buffett noted on Saturday, “There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others.”
FORBES VALUATION Warren Buffett’s net worth exceeds $140 billion, making him the fifth-richest person in the world, according to Forbes’ estimates. Once the world’s richest individual, Buffett is a founding signer of the Giving Pledge, committing to donate a majority of his wealth to charitable causes.