Berkshire Hathaway has experienced a significant surge to a record high in the wake of its Saturday earnings report, which showcased an operating profit for the second quarter surpassing Wall Street's expectations.
The Class B shares of Buffett's conglomerate, which comprises railroad, utility, energy, and insurance companies, soared by 3.6 percent, reaching $US362.58 at the closing bell – marking the highest close ever. This remarkable intraday gain represents the sharpest increase since November and has propelled the stock to surpass its previous all-time high set in March last year.
Jim Shanahan, an analyst at Edward Jones, emphasised Berkshire's appeal as an asset for a diversified financial portfolio, citing its defensive qualities. Shanahan said, "We still think Berkshire is an attractive name to own in a diversified financial portfolio due to its defensive qualities. Their earnings outlook improved a lot in the last 9 to 12 months as interest rates have moved higher and cash balances are back to approaching record levels."
The less widely traded Class A stock also set a closing record, reaching an impressive $US551,920.
Berkshire Hathaway's Class B shares have surged approximately 17 percent this year, performing on par with the S&P 500 Index.
The company's robust Q2 results were bolstered by increased insurance underwriting earnings, which included benefits from the acquisition of Alleghany Corp. Furthermore, the Federal Reserve's campaign of interest rate rises provided a boost to Berkshire's investment income from its substantial holdings in short-dated US Treasuries.
Matthew Palazola, an analyst from Bloomberg Intelligence, highlighted the better-than-expected operating company earnings of about $US9 billion, attributing them to the strength in insurance, including favourable reserve development at Geico, which offset a drop in railroad earnings.
As the largest S&P 500 stock outside the tech giants, Berkshire Hathaway's record-high achievement underscores the market's rally and the optimism surrounding the US economy. The Omaha-based holding company operates and invests across various sectors, well beyond its core insurance businesses. The company's presence extends from the thousands of miles of BNSF rail routes for shipping goods to Clayton Homes communities, Benjamin Moore paint, and Dairy Queen blizzards.
Cathy Seifert, an analyst at CFRA, pointed out that Berkshire Hathaway could serve as a microcosm for the broader economy and the market due to its diversified business holdings.
The strong performance of Berkshire shares this year is partly attributed to the gains in Apple's stock. As the largest holding in Berkshire's equity portfolio, the surge in Apple shares by roughly 38 percent has positively impacted Berkshire's overall value.
While Apple's rise has been a driving force, analysts emphasise that there are other factors contributing to Berkshire's success in the market.
