Retail Investors Help Lift Warren Buffett’s Berkshire Hathaway to New Heights

‘[Warren] Buffett and his acumen are in vogue again,’ says Darren Pollock.

By Eric Platt

August 11, 2023

Warren Buffett’s Berkshire Hathaway surged to a record high this week, helping increase its valuation this year by more than $100bn — the equivalent of Ford and Halliburton combined.

The “Oracle of Omaha,” whose sprawling railroad-to-confectioner conglomerate is now worth $780bn, has enticed investors despite a quarter that revealed the negative effects of the cooling US economy on some of its biggest portfolio companies, and few new investments.

JPMorgan Chase strategists noted there was persistent demand for the company’s vastly cheaper B shares, which currently trade at $357, and for its $543,680 class A stock, traditionally a quieter market.

Berkshire’s second-quarter results this month indicate what is driving the enthusiasm.

Profits for the quarter were nearly $36bn, including $10bn of operating earnings — a 6.6 per cent year-on-year rise and a measure of the profitability of its vast business portfolio.

The results also contained evidence that the US economy is no longer running at the speed it was when stimulus measures fueled a post-pandemic rebound.

Berkshire’s BNSF Railway, which runs from California to Illinois, reported a decline in shipping revenues and said consumer and industry demand had fallen. The slide in the housing market hit Berkshire’s building products business, as well as its real estate broker and manufactured homes businesses.

It was a fact that few shareholders raised as a concern. As is usually the case, they were more focused on Buffett’s investment decisions.

Darren Pollock, a portfolio manager at Cheviot, said that while an “optimistic stock market is at least in part behind Berkshire’s rise”, the gains in Apple, its successful investments in energy and Japanese trading houses were also a factor.

“Buffett and his acumen are in vogue again,” he said. “The market’s perception — certainly not the reality — regarding his ability waxes and wanes over time. On a few occasions in the past quarter-century it was fashionable for some in the market to believe, wrongly, that Buffett had ‘lost it’.”

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