Warren Buffett tours the grounds at the Berkshire Hathaway Annual Shareholders Meeting in Omaha Nebraska.
David A. Grogan | CNBC
Warren Buffett’s Berkshire Hathaway reached a $1 trillion market capitalization on Wednesday, the first non-technology company in the U.S. to score the coveted milestone.
Shares of the Omaha-based conglomerate have rallied more than 28% in 2024, far above the S&P 500’s 18% gain. The $1 trillion threshold was crossed just two days before the ‘Oracle of Omaha’ turns 94 years old.
The shares were up 1.2% on Wednesday, allowing it to top the $1 trillion mark, per FactSet.
Unlike the six other companies in the trillion dollar club (Apple, Nvidia, Microsoft, Alphabet, Amazon, Meta), Berkshire is known for its old-economy focus as the owner of BNSF Railway, Geico Insurance and Dairy Queen. (Although its sizable Apple position has helped drive recent gains.)
Buffett took control of Berkshire, a struggling textile business, in the 1960s and transformed the company into a sprawling empire that encompasses insurance, railroad, retail and energy with an unmatched balance sheet and cash fortress.
Buffett has been in a defensive mode as of late, dumping a massive amount of stock, including half of his Apple stakewhile raising Berkshire’s cash pile to a record $277 billion at the end of June.
While Buffett famously never times the market and advises others to not try to either, these recent moves served as a wake-up call to some of his followers on Wall Street, who believe he saw some things he did not like about the economy and market valuation.
Berkshire invests the majority of its cash in short-term Treasury bills, and its holding in such securities — valued at $234.6 billion at the end of the second quarter — has exceeded the amount the U.S. Federal Reserve owns.
So it’s hard to judge why investors are rewarding Berkshire with the $1 trillion crown today, whether it’s a bet on the American economy and Buffett’s sprawling set of businesses set to benefit if it keeps chugging along or whether they see Berkshire as a cash fortress that will generate steady income in the face of an uncertain macro environment.
High price tag
Berkshire’s original Class A shares carry one of the highest price tags on Wall Street. Today, each one sells for 68% more than the median price of a home in the U.S.
Berkshire Hathaway A shares, long term
That’s because Buffett has never split the stock, arguing that the high share price attracts and retains more long-term, quality-oriented investors. The Ben Graham protégé has said that many Berkshire shareholders use their stock as a savings account.
Still, Berkshire issued Class B shares in 1996 at a price equal to one thirtieth of a Class A share to cater to smaller investors wanting a small piece of the Buffett’s performance.
