How Berkshire Hathaway Soared to $200,000 a Share

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Bufett Lunch
Nati Harnik/AP
There are all sorts of exclusive clubs on Wall Street -- and then there's Warren Buffett's Berkshire Hathaway (BRK-A).

On Thursday, it became the only member of the $200,000-a-share club. That's right: A single share of its Class A stock is trading for more than $200,000. And Berkshire is likely to remain the sole member of that club for a very long time. The next-highest priced stock is Tower Properties (TPRP), a real estate holding company that trades over the counter for $10,500 a share.

Some critics have argued for years that Berkshire is overvalued, but it has marched steadily higher year after year. According to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, Berkshire has delivered an annual return of 22.6 percent (including reinvested dividends) ever since the stock topped $100 a share back in 1977. That's a record of consistently outstanding performance unmatched by any other Wall Street guru.

$1,000 to $2 Million

That means, if you invested $1,000 in Berkshire stock in May of 1977 and let it ride, your investment would be worth $2 million today.

The stock is up 13 percent so far this year, well ahead of the 5.6 percent gain for the S&P 500 (^GSPC).

Berkshire Hathaway is basically a mutual fund of Buffett's investments, including dozens of companies that he's bought and operated, as well as huge stakes in other publicly traded stocks.

The company's biggest stock holdings are in Wells Fargo (WFC) (more than $23 billion worth of stock) and in Coca-Cola (KO) (more than $16- billion). Buffett has also placed big bets on financial companies American Express (AXP) and Goldman Sachs (GS), energy giants Exxon Mobil (XOM) and ConocoPhillips (COP), DirecTV (DTV), DaVita Healthcare (DVA), and many others.

Buy and Hold

Buffett has long preached a buy-and-hold investment strategy, and he's maintained investments in many of these companies for several decades.

In addition to those stock market investments, Berkshire also owns a long list of insurance, railroad, energy and consumer business. Among the best-known brands are Geico, Burlington Northern Santa Fe, Fruit of the Loom, Dairy Queen and Mars. Last year, Berkshire acquired H.J. Heinz.

But unlike most other big-time buyout specialists, Buffett and partner Charlie Munger usually keep the existing management and staff of the companies being bought. Just like his stock market strategy, he buys with a long-term view, not so worried about the quarter-to-quarter gyrations that dominate Wall Street trading.

Pilgrimages to Omaha

Buffett is widely considered an investment genius, and his nickname of the "Oracle of Omaha" reflects that he still lives in that same Nebraska city where he was born.

Each year, tens of thousand of Berkshire Hathaway investors flock to Omaha for the company's annual Investor Day activities, hoping that some of Buffett's wisdom will rub off on them.

Buffett, who turns 84 later this month, was ranked as the world's richest person back in 2008, before he started giving billions of his vast fortune, primarily through the Bill & Melinda Gates Foundation.

Unlike most companies, Berkshire has refused to split its stock to make it more affordable for investors. Buffett believes the high price encourages investors to be more like him -- willing to place long-term bets on the American economy.

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14 Comments

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dave

how limit the number of stocks thats how you get 200,000 a share

August 18 2014 at 9:27 AM Report abuse rate up rate down Reply
abcadams1

Buffet has a woman CEO. Women CEOs ROCK!

August 17 2014 at 10:04 PM Report abuse +2 rate up rate down Reply
alfredschrader

Buffett is no investment genius. Berkshire Hathaway is a front for GEICO the real cash cow.
Did you know that less than 1% of all life insurance is ever paid out and the numbers are similar for auto insurance ? It's a license to steal. The problem Buffett has is where to park all of that cash. BH is perfect because having a large number of investors takes the heat off of Buffett - nobody can point fingers at Buffett since he "shares" the carnage.
Buffett is making so much money from selling insurance, he could buy most of America (15% in 15 minutes ring a bell ?).

August 16 2014 at 3:16 PM Report abuse rate up rate down Reply
1 reply to alfredschrader's comment
abcadams1

AAA is much cheaper than GEICO too. GEICO told me my insurance would cost $420. AAA with even better coverage was $251.

August 17 2014 at 10:03 PM Report abuse rate up rate down Reply
throcksals

I first bought Berkshire A when it weas $129,000 per share I still own it at $202,000 the man has more vision
than most people realize a true genious. Trust me if it hit the 200K number it will keep on going, regardless of his health-that why he has a staff

August 16 2014 at 1:27 PM Report abuse rate up rate down Reply
1 reply to throcksals's comment
socioeconomist1

see, told you that chumps are just caught up in the celebrity nonsense.. This poster isn't talking about Warren's investment strategy or the reliability of insurance to create profits... He is talking about Buffett.... Like I said when the old man dies, this stock is going to tank hard when all the star struck fools freak out.

August 16 2014 at 2:48 PM Report abuse +1 rate up rate down Reply
bdgrizcp

The only negative thing you can say about BH is a good portion of its value is tied to the health of one aging person. You may never own a share of the stock, but its perfomance confirms the wisdom of the owner's stategy.

August 16 2014 at 6:39 AM Report abuse rate up rate down Reply
1 reply to bdgrizcp's comment
socioeconomist1

That's not true.... his life insurance company shorted widows of their husband's policy for decades before the government changed the laws to make that highly illegal...

Then, Warren used to say that he would only invest in American companies... That turned out to be a lie.

Also, the reason why owning auto insurance is mandatory is because of Warren Buffett. Before having the amount of minimum liability in the bank, then Warren bought off every state government to make having auto insurance mandatory. So, a person that never gets in an accident is forced to pay to buy auto insurance for no reason.... It's extortion.

Warren Buffett is the biggest snake on the planet.. He got Obama into office so Obamacare would get made into law.... Buffett underwrites 90% of every insurance company on the planet. Which is why no one actually buys their insurance off of Berkshire, yet Berkshire turns massive profits from their insurance division. Lloyds of London and all of the insurance companies buy their insurance off of Berkshire. Warren insures the insurance industry.

and no, I would never own any Berkshire stock.... like I said, there are much better investing options that can get a better return... Citi bank has gone up 700% since 2009 while Berkshire only doubled.

August 16 2014 at 2:54 PM Report abuse +1 rate up rate down Reply
socioeconomist1

Oh and Google and Tesla have stomped Berkshire's nuts in the dirt.... Berkshire has only doubled since the recession while Tesla is a ten bagger.

August 16 2014 at 1:45 AM Report abuse rate up rate down Reply
2 replies to socioeconomist1's comment
bdgrizcp

Not a valid comparison. Both Google and Tesla have not stood the test of time. Many people are dumping Google and Tesla will never be more than a niche product.

August 16 2014 at 6:42 AM Report abuse +1 rate up rate down Reply
napajack

Youu're obviously pretty naive about the investment world.

August 16 2014 at 1:06 PM Report abuse +1 rate up rate down Reply
1 reply to napajack's comment
socioeconomist1

LMAO.... yeah, the way I know Tesla has gone from $19 a share to over $200 makes it obvious that I know very little about the "investment world"

August 16 2014 at 2:45 PM Report abuse +1 rate up rate down
socioeconomist1

I wouldn't invest in Berkshire... Owning those stocks is like collecting baseball cards. Without any dividends, you are relying on someone else to give you a good price for the stock. The day Warren dies off, the stock will lose 40% of it's value within a month. The only reason people invest in Berkshire is because they are caught up in the celebrity BS.... So, when the celebrity dies, so will the share value.. With the old man being at 84, every day adds more risk to that investment.

August 16 2014 at 1:44 AM Report abuse rate up rate down Reply
jenjutz

brk.b shares are 1/1500 of an A share. Even those of us whith much less to invest can invest in Berkshire.

August 16 2014 at 12:25 AM Report abuse +1 rate up rate down Reply