Six-million-dollar man? Try 100-billion-dollar man. That’s what Warren Buffet is worth after Wednesday’s jump on Wall Street – on paper at least – through his 18% shareholding in Berkshire Hathaway.
For whatever reason(s) in the minds of Wall Street investors, Buffett – the man who couldn’t take a trick in 2020 and was forced to spend a record $US25 billion buying back Berkshire Hathaway shares, has hit the right button this year and has starred in the first 10 weeks of 2021, making him wealthier and bigger than ever.
The shares hit all-time highs this week, the value of the company is approaching $US600 billion and so far in 2021 Berkshire’s market cap has grown, unlike those of last year’s stars, Apple, Netflix, Amazon and Alphabet and Google.
The recipe hasn’t changed (except the surge in buybacks), it seems to be investors who have lost some of the starry-eyed valuations of the megatechs and rotated back to the more mundane and slightly safer sectors of the market (Not that the likes of Apple, Amazon, Microsoft and Facebook are in some way weak).
Buffett owns around 18% of Berkshire’s voting shares and both they and the cheaper non-voting B class shares hit levels never seen before as investors returned to chasing so-called value stocks as fears about inflation and US interest rates eased.
The closely watched Berkshire A class voters topped $US400,000 in regular trading on Wednesday, faded a little then rose strongly in after-hours trading for a total gain through both sessions approaching 2.9%.
That took Berkshire’s market value to just on $US597 billion on Wednesday and a move to top the $US600 billion level seems in prospect.
Until he started donating shares to charity back in 2006, Buffett owned just on a third of Berkshire, which at current levels would see his worth approach a huge $US200 billion, easily making him the richest person in the world.
He has given away $US37 billion worth of shares (when they were made, according to Reuters calculations) to the Bill and Melinda Gates Foundation and four family charities.
He has a legion of fans in the US and around the world – his most notable fan in Australia is billionaire Hamish Douglass at Magellan Financial Group.
And more and more analysts see Berkshire benefitting from the latest $US1.9 trillion stimulus package from the Biden Administration thanks to its wide spread of 90 businesses in many US industrial and service sectors.
So far in 2021 Berkshire shares have the gains on the board – up more than 14% so far and thanks to a gain of 10.4% in the past month.
The S&P 500 is up just under 4% so far this year, the Dow is up 5.5%. Nasdaq is up just 1.4%.
Berkshire shares have fallen short of the S&P 500 in the three years to 2020.
After being written off by most analysts and many investors in the back end of 2020 for missing the megatech boom and being old fashioned (ignoring that it was Apple’s biggest shareholder) Berkshire is now back in vogue and his legion of fans think he is really a 600-billion-dollar man, which is a big burden to carry when you are 90 years old.
