Warren Buffett Joins Exclusive $100 Billion Club

With Berkshire Hathaway’s shares hitting record highs, Warren Buffet hit his own personal record and became the world’s sixth-richest person. On Wednesday the 10th March 2021, Berkshire Hathaway’s shares closed at $399, 650, meaning an overall rise in 2021 of 14%.

Ninety-year-old Buffet has a personal stake of 249,000 shares in Berkshire, this equates to a 38% stake in the company and has a valuation of $99.5 Billion. Forbes estimated that when his other holdings are considered, Buffet, often referred to as ‘the Oracle of Omaha,’ has a personal fortune valued at $100.5 billion.

As of September, of last year, estimates placed his worth at $73.5 Billion. An exceptional increase in any circumstances, but even more impressive when set against the backdrop of the turbulent times the increase took place in.

The Midas Touch

What is even more surprising is that many of Berkshire Hathaway’s businesses are in sectors that have suffered hugely in the pandemic. Core businesses in railroad and retail are amongst the worst hit in the economy, yet this has not dented investor's confidence.

Despite this vulnerability, revenues from these businesses still netted $245.5 Billion, this equating to a decline of 3.5% year-on-year. Given the circumstances, this is nowhere near as bad as analysts forecast and goes some way to explaining the explosive rise in Berkshire’s share value.

Another factor is the imminent re-opening of the economy as vaccinations finally begin to ease the pandemic. This is an almost unprecedented situation, and the forecasts are that we are going to see above-average growth as the world kick-starts.

Included in sectors that are expected to see large growths are: -
  • Transportation
  • Utilities
  • Manufacturing
  • Retail
This places Buffett’s conglomerate at the forefront of an economic revival that is a once-in-a-lifetime event.

Other factors that have contributed to this unceasing investor confidence is the diversity of Berkshire’s holdings, including wholly owning companies such as Duracell, Dairy Queen, Fruit of the Loom, and Geico to name a few. As well as this they also have substantial holdings in Kraft Heinz, American Express, Apple, Coca-Cola, and the Bank of America.

They also had holdings in many major US airlines, including Delta Airlines, United Airlines, American Airlines, and Southwest Airlines. Given the current state of the air-travel industry, the offloading of these investments early in 2020, may also be considered a contributing factor to the continuing ‘Bullish’ nature of Berkshire Hathaway’s stock.

It is uncertain yet when air-travel numbers will increase back to pre-pandemic levels and, with limited passenger numbers, there could well be a brutal competitive spiral that will see reduced sales and profits and inevitably, reduced investor returns. This then seems another clever piece of business by the ‘Oracle of Omaha.’

Can I invest in Berkshire Hathaway?

Of course, for the average investor on the street, the cost of these shares makes any investment a huge commitment that is out of the reach of most of us. These are now the most expensive publicly traded stocks. This is down to the fact that the company has never split the stock, and as a result, the share price has risen as the company experienced immense growth.

The alternative is to plump for Class B shares. These were first issued in 1996 as a result of market demands for a lower value share that allowed ordinary investors a slice of the Berkshire pie.

Currently, these are trading at around the $260 mark, and with the clever money still batting for the Oracle of Omaha, these could be a good bet.