Warren Buffett did it: the holding company he heads has surpassed $1 trillion in market value

Warren Buffett (Scott Eells/Bloomberg)

Berkshire Hathaway Inc. became the first U.S. company outside the technology sector to surpass $1 trillion in market value.

The shares of the conglomerate Warren Buffett rose as much as 0.8% on Wednesday to push its market capitalization above the $1 trillion mark for the first time. The stock has surged this year on the back of strong insurer results and economic optimism. The Omaha, Nebraska-based company joins the ranks of a small group that has surpassed the milestone, dominated by tech giants such as Alphabet, Meta Platforms and Nvidia.

“Berkshire has done it the slowest, but safest way,” he said. Steve Checkfounder and chief investment officer of Check Capital Management. His firm has about $2 billion in assets under management, and Berkshire is its largest holding. “It’s harder to make money the old-fashioned way.”

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Berkshire’s rally this year is outpacing the gains of the S&P 500, and the company is off to one of its best starts to a year in a decade. It’s up 30% for 2024, while the market benchmark is up 18%. The company isn’t that far from the so-called “magnificent seven,” with a gauge of the biggest tech stocks up 35%. this year.

Berkshire Hathaway stock

Buffett has spent most of his life transforming Berkshire Hathaway from a struggling textile manufacturer into a sprawling business empire. He shaped the company alongside his partner Charlie Munger, who died in November at the age of 99.

Berkshire’s market value rose by about 20% annually from 1965 through last year, nearly double the annual return of the S&P 500 over the same period. This has made Buffett one of the richest people in the world and perhaps the most prolific investor in history.

The conglomerate’s strength comes as optimism about the economy grows and the Federal Reserve is expected to cut interest rates at its September meeting. In August, consumer confidence hit a six-month high. Berkshire’s businesses range from truck-stop operator Pilot Travel Centers to ice cream chain Dairy Queen and battery brand Duracell.

Shares of Warren Buffett’s conglomerate rose as much as 0.8% on Wednesday to push its market capitalization above the trillion-dollar mark for the first time.

This year alone, the stock has added more than $200 billion in market capitalization, a record for the company but a stark contrast to Nvidia’s nearly $2 trillion rise. Berkshire’s rally has pushed it into overbought territory, according to the relative strength index, and has prompted some caution among analysts.

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According to Matthew Palazolaan analyst at Bloomberg Intelligence, the fundamental outlook for Berkshire’s core businesses is not necessarily much brighter, but the company has an “all-weather” portfolio.

Lower interest rates, meanwhile, could hurt the profitability of the record level of cash Berkshire has amassed by trimming its stake in Apple Inc. and reducing its holdings in Bank of America Corp.

Berkshire’s rally this year outpaces S&P 500 gains

Buffett’s cash level stood at about $276.9 billion as of second-quarter results reported in early August. The size of the Apple stake had become a concern, Check said, and the move to reduce that exposure was prudent.

“It has eliminated a lot of that risk,” Check said.

With information from Bloomberg

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