Berkshire Hathaway Inc. became the first US company outside of the tech sector to surpass $1 trillion in market value.

Shares of Warren Buffett’s conglomerate rose as much as 0.8% on Wednesday to push its market capitalization above the trillion-dollar mark for the first time. The stock has rallied this year on strong insurance results and economic optimism. The Omaha, Nebraska-based company joins the ranks of a small group to crack the milestone, dominated by technology giants like Alphabet Inc., Meta Platforms Inc. and Nvidia Corp.  

“Berkshire has done it the slower, but more sure, way,” said Steve Check, the founder and chief investment officer of Check Capital Management. His firm has about $2 billion in assets under management, with Berkshire as their largest holding. “It’s harder to make money the old-fashioned way.”

Berkshire’s rally this year has outpaced the S&P 500’s gains, with the company off to one of its best annual starts in a decade. It’s gained 30% in 2024, while the market benchmark is up 18%. The company isn’t that far behind the so-called Magnificent Seven: a gauge of the biggest tech stocks is up 35% this year.

Buffett has spent the bulk of his life turning Berkshire Hathaway from a struggling textile maker into a sprawling business empire. He shaped the company alongside longtime business partner Charlie Munger, who died in November at age 99.

Berkshire’s market value climbed by roughly 20% a year from 1965 through last year – nearly double the S&P 500’s annual return in that time. That’s turned Buffett into one of the richest people in the world, and perhaps the most prolific investor ever.

The conglomerate’s strength comes as optimism for the economy builds, with the Federal Reserve expected to cut interest rates at its September meeting. Consumer confidence rose to a six-month high in August. Berkshire’s businesses span from truck stop operator Pilot Travel Centers LLC to ice cream chain Dairy Queen and battery brand Duracell.

The stock has added more than $200 billion in market capitalization this year alone – a record for the firm, but a sharp contrast to Nvidia’s nearly $2 trillion increase. Berkshire’s rally has pushed it into overbought territory, based on the relative strength index, and prompted a bit of reticence from analysts.

The fundamental outlook for Berkshire’s core businesses isn’t necessarily that much brighter ahead, according to Bloomberg Intelligence analyst Matthew Palazola, but the firm boasts an “all-weather” portfolio.

Meanwhile, lower interest rates could impact returns on the record cash pile Berkshire amassed while slashing its Apple Inc. stake and paring its Bank of America Corp. holdings. Buffett’s cash heap stood at about $276.9 billion in second-quarter results reported in early August. The sheer size of the Apple stake had become a worry, Check said, and the move to reduce that exposure was prudent. “It’s taken a lot of that risk off the table,” Check said.
 

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

Despite his busy work schedule, Microsoft co-founder Bill Gates used his meetings with Warren Buffett as an escape from work pressure, a new book, written by New York Times correspondent Anupreeta Das, revealed. In her book, titled ‘Billionaire, Nerd, Savior, King: Bill Gates and his Quest to Shape the World’, Ms Das wrote that every moment of the 68-year-old billionaire’s workday was meticulously planned. His schedule, even down to his free time, was broken down into five-minute increments. But despite his demanding work schedule of back-to-back meetings, there were days when Mr Gates visited Mr Buffet to escape his responsibilities. 

According to Business Insider, Ms Das in her book wrote that Mr Gates would take his private jet to Omaha just to visit Mr Buffett and get away from a “tightly scheduled life, including personal time, largely organised and arranged by” his then-wife Melinda French Gates. 

“When Buffett asked Gates why he couldn’t control his life and live it in a way he wanted to, Gates would simply shrug. ‘Bill likes to have a schedule; I don’t,’ Buffett said in an email,” Ms Das wrote.

The author also revealed that Mr Buffet, the chairman and CEO of Berkshire Hathaway, would even pick Mr Gates up from the airport sometimes, and the pair would have “freewheeling conversations”. And when Mr Gates couldn’t make it to Omaha, they’d play bridge together online, the book said. 

Mr Buffett resigned from the Gates Foundation in 2021 and since then their friendship has cooled over the years. In May, the 68-year-old praised Mr Buffett’s more relaxed approach to scheduling. 

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“It took far too long for me to realize that you don’t have to fill every second of your schedule to be successful,” Mr Gates wrote in a Threads post. “In hindsight, it’s a lesson I could have learned a lot sooner had I taken more peeks at Warren Buffett’s intentionally light calendar,” he added. 

Notably, the friendship between the two began in 1991, when Bill Gates’ mother, Mary Gates, invited him to spend the Fourth of July at their family retreat, the New York Times reported. Among the guests was Mr Buffett, whom Mr Gates initially dismissed as just a “stockbroker”. However, once, they sat down, they connected instantly. This marked the beginning of their friendship that has lasted decades despite their very different personalities. 

Chairman Warren Buffett, left, at the Berkshire Hathaway Inc. annual shareholders’ meeting in Omaha, Nebraska, U.S., on May 3, 2024.
| Photo Credit: REUTERS

Billionaire investor Warren Buffett said that the Indian market has “unexplored” opportunities which his conglomerate holding company, Berkshire Hathaway, would like to explore “in the future”.

Mr. Buffett’s remarks came at Berkshire’s annual meeting on May 3 when Rajeev Agarwal of DoorDarshi Advisors, a U.S.-based hedge fund that invests in Indian equities, asked him about the possibility of Berkshire exploring in India, the world’s fifth-largest economy.

“It is a very good question. I am sure there are loads of opportunities in countries like India,” he said.

“The question, however, is whether we have any advantage or insights into those businesses in India or any contacts that will make possible transactions that Berkshire would like to participate in. That is something a more energetic management at Berkshire could pursue,” the co-founder, chairman and CEO of Berkshire Hathaway said.

Mr. Buffett, 93, said Berkshire has a great reputation around the world. He said, his Japanese experience has been fascinating enough.

“There may be an unexplored or an unattended opportunity…but that may be something in the future,” he said about India.

Mr. Buffett said the question is if Berkshire has some kind of advantage in pursuing those unattended opportunities, particularly against people who are managing other people’s money and getting paid based on assets.

During a Question and Answer session, Mr. Buffett answered several questions related to some of the key investment decisions taken by Berkshire Hathway lately.

Decidedly reducing stake in Apple was one of the key topics. Mr. Buffett clarified that it had nothing to do with the long-term view on the stock and Apple will probably remain one of their largest holdings despite the recent slowdown.

He also told shareholders that Vice Chairmen Greg Abel and Ajit Jain have proven themselves the right people to lead Berkshire after he departs.

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| Photo Credit: AFP

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Warren Buffett on February 24 moved to reassure investors that his conglomerate Berkshire Hathaway would serve them well over the long term, even as he mourned the recent passing of his longtime second-in-command Charlie Munger.

In his widely-read annual letter to Berkshire shareholders, which accompanied a record $37.4 billion full-year operating profit, Mr. Buffett said his more than $900 billion conglomerate has become a fortress capable of withstanding even an unprecedented financial disaster. “Berkshire is built to last,” he wrote.

Mr. Buffett also tempered expectations for Berkshire’s stock price, saying the company’s huge size left “no possibility of eye-popping performance.”

“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” Mr. Buffett wrote. “Some we can value; some we can’t.”

But the 93-year-old billionaire also assured investors that Vice Chairman Greg Abel, his designated successor, was “in all respects ready to be CEO of Berkshire tomorrow.”

Charlie Munger was the “architect” of Berkshire, says Buffett

Mr. Buffett also saved his most heartfelt words for Mr. Munger, who died in November at age 99. He called Mr. Munger the “architect” of Berkshire, with Mr. Buffett being only the “general contractor,” and reminded investors how Mr. Munger pushed him to buy wonderful businesses at fair prices instead of fair businesses at wonderful prices.

Berkshire’s “extreme fiscal conservatism,” including reluctance to make major acquisitions at inflated prices, is one reason Mr. Buffett has let the Omaha, Nebraska-based company’s cash stake swell to a record $167.6 billion.

“In a way his relationship with me was part older brother, part loving father,” Mr. Buffett wrote, referring to Mr. Munger. “Even when he knew he was right, he gave me the reins, and when I blundered he never–never–reminded me of my mistake.”

Cathy Seifert, a CFRA Research analyst who rates Berkshire “buy,” said Mr. Buffett tried to show how Berkshire could withstand rocky shoals, even after Mr. Munger helped him transform a once-failing textile company into a colossus mirroring the broader economy.

“Nothing is perfect,” she said. “He tried to show there is a succession plan, and Berkshire would stick to its knitting.”

Mr. Buffett likened Berkshire’s caution in making acquisitions, with the stock market now routinely setting record highs, to an insurance policy against the kind of hurried, unwise business decisions that would have irked Mr. Munger.

“I have a sense that Berkshire wants to make Charlie proud,” said Thomas Russo, a portfolio manager and longtime shareholder at Gardner, Russo & Quinn in Lancaster, Pennsylvania.

Berkshire’s results

Mr. Buffett’s letter was accompanied by the company’s quarterly and annual results.

Operating profit from its dozens of insurance, railroad, industrial, energy, and retail businesses rose 28% in the quarter to $8.48 billion and 21% for the year to a record $37.4 billion.

Insurance businesses such as Geico benefited from improved underwriting quality and higher investment income as interest rates rose, offsetting wage pressures at the BNSF railroad and wildfire losses at Berkshire Hathaway Energy.

“Results reflect the value of holding a diversified collection of operating businesses,” said Jim Shanahan, an Edward Jones analyst with a “hold” rating on Berkshire.

Investment gains in Berkshire’s $354 billion equity portfolio, including stocks such as Apple, American Express, Bank of America and Coca-Cola, helped the company generate a $96.2 billion annual profit.

The amount reflects accounting rules that require Berkshire to report gains in stocks it hasn’t sold, however, making it “worse-than-useless” to investors according to Buffett.

Berkshire’s caution, and one of the reasons for its record cash stake, was reflected in its having sold about $24 billion more stocks than it bought in 2023.

Results also included some of Occidental Petroleum’s earnings, which reflected Berkshire’s approximately 28% stake in the oil company.

Mr. Buffett said he expects Berkshire will keep that stake “indefinitely,” along with its stakes in five Japanese trading houses: Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo.

Berkshire’s businesses also include industrial parts and chemical companies, a big real estate brokerage, and retail brands such as Dairy Queen, Fruit of the Loom and See’s candies.