Buffett’s business has been destroying the market in the last year.
What was the cause?
Berkshire Hathaway (BRK.A -0.23%) (BRK.B -0.45 percent) Class B stock climbed approximately 11.1 percent in March, based on the data of S&P Global Market Intelligence. While its Class A shares rose around 9.8 percent during the month.
After an 8.8 percent decline in February in the month of February, the S&P 500 index increased by around 3.6 percent in February as well as Berkshire stock was a beneficiary of the upbeat market sentiment. The investment conglomerate also seemed to have seen an upswing thanks to its $11.6 billion purchase of insurance firm Alleghany ( Y), and its stock price hit an all-time high in March.
What’s the question?
Berkshire Hathaway stock soared to an all-time high in March, however the investment conglomerate’s latest valuation record hasn’t been completely due to market dynamics. Its S&P 500 index is still down around 5.2 percent from its high in March, and it’s Nasdaq Composite index is down about 11.2 percent from its previous high.
In addition to the holdings in its stock portfolio, Berkshire also owns railroad operations, energy companies and insurance companies. The overall performance of Berkshire’s stocks as well as its other divisions has contributed to the company’s valuation to reach new heights despite volatility in the wider market. Markets also appear to be extremely bullish about the acquisition of Alleghany.
What do we do now?
Berkshire Hathaway has delivered incredible performance under Warren Buffett’s guidance. The shares of the company’s Class A have increased by more than 2,777,500% over the closing value of just $19 at the time Buffett bought the former textile firm in 1965, and currently trade in the $527-760 range.
If you’re looking for diversified market exposure as well as the benefits of the company’s other business, Berkshire Hathaway stock continues to be a worthy investment. Buffett as well as Chairman Charlie Munger, and the remaining analysts have proven adept at identifying appealing markets, and the company has a huge cash accumulation that it can utilize whenever it feels like.
Prior to the public announcement about the Alleghany deal, Berkshire Hathaway was holding around $146.7 billion cashwhich is a record of cash for the firm. Buffett along with Berkshire’s Berkshire team have managed to keep an amazing amount of cash dry, and purchasing the stock of the company allows investors to reap the benefits of their next purchase before the announcement goes out to the market.
