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Berkshire Hathaway Inc. (BRK.B), headquartered in Omaha, Nebraska, is a holding company that owns subsidiaries in a variety of business sectors like insurance, freight, rail, transportation, and utility. With a market cap of $1 trillion, Berkshire's other operations include a railway company, a specialty chemical company, and an international association of diversified businesses.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and BRK.B definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the insurance-diversified industry. BRK.B has a diversified business model that spans insurance, energy, transportation, and consumer goods. This diversification mitigates market risks and provides multiple revenue streams. GEICO and Berkshire Hathaway Reinsurance Group contribute significant float for investments. Acquisitions like BNSF railroad and Berkshire Hathaway Energy highlight its strategic investments in stable, long-term assets.
Despite its notable strength, Berkshire slipped 2.9% from its 52-week high of $491.67, achieved on Nov. 27. Over the past three months, BRK.B stock gained marginally, underperforming the Financial Select Sector SPDR Fund’s (XLF)11.1% gains during the same time frame.
In the longer term, shares of Berkshire rose 33.8% on a YTD basis and climbed 33.7% over the past 52 weeks, underperforming XLF’s YTD gains of 35.2% and 40.5% returns over the last year.
To confirm the bullish trend, Berkshire has traded above its 50-day moving average since early November. It has been trading above its 200-day moving average over the past year.
BRK.B’s underperformance was driven by increased insurance underwriting and administrative expenses.
On Nov. 2, BRK.B reported its Q3 results, and its shares closed down more than 2% in the following trading session. Its EPS stood at $12.18, compared to a loss per share of $5.88 in the year-ago quarter. The company’s operating earnings declined 6.2% year over year to $10.1 billion.
In the competitive arena of finance, JPMorgan Chase & Co. (JPM) has taken the lead over Berkshire, showing resilience with a 44.8% uptick on a YTD basis and a solid 57% gain over the past 52 weeks.
Wall Street analysts are moderately bullish on BRK.B’s prospects. The stock has a consensus “Moderate Buy” rating from the six analysts covering it, and the mean price target of $481.50 suggests a marginal potential upside from current price levels.
