Berkshire Hathaway (NYSE:BRKa), Billionaire Warren Buffet’s conglomerate that some fear may be losing steam over time, has shaken off those woes as it soared to new heights in the market, buoyed by investor confidence in the conglomerate’s future. Berkshire Hathaway Inc.’s (NASDAQ: BRK/A) shares soared to $300,000 each for the first time on Monday, leaving many remorseful investors in tears that they didn’t buy sooner.
The world’s most expensive stock
With Berkshire Hathaway’s A shares now being the most expensive stock in the world, some are legitimately concerned that a bubble may be forming. The conglomerate’s extraordinary gains in the market this year – it yet again outperformed the S&P 500, rising by some 22 percent – seem to have plenty of investors confident that its future is nothing but rosy, however. As bettors continue to bank on Buffet’s continued success, the conglomerate’s lucrative A shares are only likely to climb higher, eclipsing the competition.
The fate of the conglomerate’s healthy A shares aren’t the only thing that has investors pleased, either. The conglomerate’s B shares have also climbed by some 22 percent in the last year, as Buffet’s diversified assets evidently keep proving themselves to be healthy and growing. Not everything is well in Buffet’s kingdom, however; the conglomerate has muddled through four straight quarters of lower operating profit, for instance, and concerns about a bubble and the conglomerate’s long-term future are still very alive and well in the minds of many investors.
Buffet’s famous strategy of buying and holding stocks – and not focusing too much on each minute detail or change in their pricing – has proven to be a guaranteed success before, however. The investor and philanthropist, who is worth well over a jaw dropping $80 billion, finds himself in a unique position in the market; more so than virtually any other conglomerate’s shares, those of Berkshire Hathaway’s often appear to be direct votes of confidence in the conglomerate’s leader, Buffet himself. His universal renown as a savvy investor is likely to continue to buoy Berkshire Hathaway’s A and B shares alike for some time, then, as few have the tenacity to voice doubts about him, let alone the money or track record to backup those concerns.
Above all else, one of Buffet’s own preferred measures of a conglomerate’s long-term health, its assets minus liabilities, clearly indicates Berkshire Hathaway isn’t going anywhere anytime soon. The conglomerate’s book value was up 8.9 percent recently, and long-term investors in Berkshire Hathaway who have seen its historic and continued rise won’t be abandoning ship with the future looking so bright.
Betting on Buffet
Those who first bought into Berkshire Hathaway since Buffett began running it in 1967 will have seen gains topping 2,400,000 percent, thanks to the rise of its stocks from a measly $11 to its current heights. With long-term results like those, few can doubt that the conglomerate has earned its secure place in the hearts of its various investors. While it’s true that the massive price of the conglomerate’s A shares have likely encouraged long-term ownership and reduced trading, Buffet’s long-standing success, even in light of countless market shakeups that Berkshire Hathaway has endured over the past decades, continues to be the greatest indicator of its future.
Long-gone are the days of the 90’s, when concerns over bubbles mired Berkshire Hathaway’s performance for years on end. Instead, investors continue to find the conglomerate a solid investment, even as it shirks traditional investments in burgeoning sectors, like much of the tech industry. While Buffet may not be interested in the share prices of companies developing tomorrow’s self-driving cars or the latest smart phone apps, his steady hand at the wheel and investment in old industries remains the fundamental driver of his massive net worth.
Berkshire Hathaway isn’t entirely anemic when it comes to holdings in modern companies with their eyes on the future, either. The conglomerate has a healthy share of Apple Inc (NASDAQ:AAPL). stock that makes up some almost 12% of its entire portfolio, for instance, and other investments elsewhere have consistently allowed it to outperform the S&P 500.
As any savvy investor knows, there’s no one secret to success, and Buffet is no exception. While Berkshire Hathaway’s original strategy of buying extraordinarily low-priced stocks that could someday prove to be profitable investments is no longer its defining aspect, Buffet hasn’t forgotten his roots, and the conglomerate’s compounded annual gain of nearly 21% since Buffet’s taking over of the company isn’t likely to be forgotten by investors as they mull over Berkshire Hathaway’s future.
Plenty have doubted Buffet before, but recent news seems to reaffirm now age-old truths; when it comes to globally renown holding companies, none can beat Berkshire Hathaway, and the future of Warren Buffet’s brainchild is only looking brighter by the day.