Even Warren Buffett wouldn't have seen this coming.
Shares of the legendary investor's industrial conglomerate Berkshire Hathaway (BRK.A) topped $500,000 to mark a landmark turning point in the U.S. stock market at a time of great financial and economic uncertainty.
The stock rose 1.18% to $504,036 on Wednesday.
With a market value of $738 billion, Berkshire Hathaway became the only non-tech company to rank among the top 10 most valuable companies in the U.S., a club that's predominantly always been tech heavy.
The company that owns Geico, Burlington Northern Santa Fe and PacificCorp and has stakes in several high profile companies including Apple (AAPL) ranks above Mark Zuckerberg's Meta Platforms (FB) currently valued at $582 billion in market cap.
Despite this being a time of profound fiscal and monetary policy changes, Berkshire Hathaway investors can laugh their way to the bank.
This obviously includes Buffett who gained $1.5 billion today taking his total net worth to $122 billion, according to the Bloomberg Billionaires Index.
"Periodically, as alternative paths become unattractive, repurchases make good sense for Berkshire’s owners," said the prolific billionaire investor.
The stock for the railroad, energy and consumer business giant has gained 11.8% in value this year, despite economic headwinds hurting the world's most powerful economy.
"Many people perceive Berkshire as a large and somewhat strange collection of financial assets," Buffett said last month in his annual shareholders' letter. "In truth, Berkshire owns and operates more U.S.-based 'infrastructure' assets – classified on our balance sheet as property, plant and equipment – than are owned and operated by any other American corporation."
The Federal Reserve made its first rate hike in three-and-a-half years on March 15 in order to combat crippling inflation.
CFRA Analyst Cathy Seifert told CNBC that "investors’ enthusiasm for Berkshire’s aggressive share buybacks drove the shares’ performance."
Buybacks Paid Off
"Our final path to value creation is to repurchase Berkshire shares," wrote Buffett, in his traditional annual letter to shareholders. "Through that simple act, we increase your share of the many controlled and non-controlled businesses Berkshire owns."
He added that share buybacks is "the easiest and most certain way for us to increase your wealth" when "the price/value equation is right."
During the past two years, Berkshire Hathaway has repurchased 9% of the shares that were outstanding at year end 2019 for a total cost of $51.7 billion.
"That expenditure left our continuing shareholders owning about 10% more of all Berkshire businesses, whether these are wholly-owned (such as BNSF and Geico) or partly-owned (such as Coca-Cola and Moody’s)," added Buffett.
"I want to underscore that for Berkshire repurchases to make sense, our shares must offer appropriate value," Buffett insisted. "We don’t want to overpay for the shares of other companies, and it would be value-destroying if we were to overpay when we are buying Berkshire."
The Intelligent Investor
Buffett recently found his way back to the elite club ranking number five on the Bloomberg Billionaires Index, a list of the world's 500 richest people.
With a total net worth of $122 billion, up $12.7 billion year to date, Buffett edged past Google (GOOGL) Co-Founder Larry Page, who is in the sixth place with a total net worth of $119 billion.
Microsoft's (MSFT) Bill Gates is holding the number four position with a total net worth of $128 billion.
Gates lost $10.4 billion year to date, while Page saw $9.46 billion go out the window.
This was the first time in a year that Buffett had ranked this high on the list having slipped as low as 11th in October.
