Buffett's Berkshire Hathaway Tops $1 Trillion in Market Value

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.

Photo: Bloomberg; Illustration: Chris Nicholls/ALM