The stock price of Berkshire Hathaway (BRK-A) hit $100,000 today, up from a 52-week low of $70,000, but still well off its period high of $147,000.
Berkshire’s chief Warren Buffett has made a number of shrewd moves over the last year that have paid the company handsomely. The most visible of these is probably an investment in Goldman Sachs (GS), which included warrants for shares of the bank at $115 a share. Those warrants are now in the money at a level that would make them worth $2 billion at today’s stock price.
Buffett bought shares in Bank of America (BAC) and Wells Fargo (WFC) when many Wall St. analysts believed that the financial firms could not stay in business. Berkshire’s interest in BAC is up in value by more than 400% and its WFC holdings have gained more than 200%.
Berkshire has also made almost $1 billion on its investment in BYD, a Chinese car and battery maker.
Berkshire has dumped some of its weakest investments which includes a stake in Moody’s (MCO).
The $100,000 level seems to be impressive, but BRK-A has underperformed that DJIA average this year and is only up 4%. The financial divisions of Berkshire Hathaway still hold a lot of derivatives and the market is concerned about the extent of the write-offs that those might cause. Whether the stock moves higher is heavily dependent on how the market sees that value of those derivatives going forward.
Douglas A. McIntyre
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