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FRI, AUG 11, 2023
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Berkshire shares cool a bit after hitting all-time highs this week on strong earnings |
Berkshire Hathaway Class A shares closed today (Friday) at $542,900 after setting two new all-time closing highs on Monday ($551,920) and Tuesday ($553,101). The new all-time intraday high is Wednesday's $556,117.
And unlike last week, when just the A shares hit a new high, the more widely held Class B shares also went into record territory, with all-time closing highs on Monday ($362.58) and Tuesday ($363.73). Their all-time intraday high is now $364.63 from Monday's trading. Today, the B shares closed at $358.38. |
Berkshire's shares got their early-week boost from a well-received second quarter earnings report Saturday that showed operating earnings topped $10 billion, a 6.6% increase from the same period last year. Earnings from insurance underwriting jumped by 74%, thanks to higher interest rates and lower catastrophe losses.
While Morningstar expected stronger insurance underwriting, it thinks the results "fully demonstrate the benefits of Berkshire’s decentralized business model, broad business diversification, high cash-generation capabilities, and unmatched balance sheet strength." And with short-term interest rates now above 5%, investors welcomed an increase in Berkshire's cash to $147.4 billion, up 13% from the first quarter's $130.6 billion. CNBC.com quotes Glenview Trust Chief Investment Officer Bill Stone as saying, "Berkshire Hathaway’s resilient earnings illustrated the value of its diversified business mix as it added to its cash hoard." But with Berkshire's A shares up more than 11% during the second quarter, the company's stock buybacks slowed to $1.4 billion from $4.4 billion in the first quarter. |
Despite the new record highs, several analysts believe Berkshire's stock will go even higher.
Brian Meredith at UBS thinks Berkshire is trading at an 11% discount to intrinsic value and has raised his 12-month price target to $621,591 from $608,000, saying the stock is "an attractive play in an uncertain macro environment."
Edward Jones's James Shanahan believes it's not too late to invest. "We believe that the current share price represents an attractive entry point for long-term investors. Berkshire’s revenues and earnings benefit from a diverse group of operating companies and investments."
But Morningstar, which had added Berkshire to its "Best Ideas" list at the end of June last year, now believes the stock is "fairly valued" near $555,000. |
Berkshire's trims Chevron holding by 7% in second quarter
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Berkshire's second quarter stock portfolio snapshot will be released this coming Monday afternoon, but we got a partial preview from the company's earnings filing with the SEC. It listed the market values of its five biggest equity holdings as of the end of its second quarter.
They indicate no change in the number of shares held compared to the end of the first quarter for American Express, Apple, Bank of America, and Coca-Cola.
But the value of its Chevron holding indicates it held around 123.3 million shares on June 30, a decrease of 6.9% from the 132.4 million shares it held as of March 31, and a drop of 27.4% from the peak of 169.7 million shares as of September 30 last year. |
At today's closing price of $164.15 for Chevron, those 123.3 million shares, a stake of around 6.5%, would be valued at $20.2 billion.
The oil company's stock is down more than 10% year-to-date.
In contrast, Occidental Petroleum shares are up 1% so far this year. Berkshire has been consistently adding to its holdings of that energy giant, going from 136.4 million shares at the beginning of last year to 224.1 million shares as of June 28, which would be worth $14.8 billion at today's close of $65.84.
Due to Occidental stock buybacks that reduced the number of shares outstanding during the quarter, Berkshire's stake has edged up to 25.3% from 25.1%. |
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HIGHLIGHTS FROM THE ARCHIVE |
A big cube of gold (2011) |
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BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Aug. 11, 2023 |
Berkshire's top holdings of disclosed publicly-traded stocks in the U.S., Japan, and Hong Kong, by market value, based on today's closing prices.
Holdings are as of March 31, 2023 as reported in Berkshire Hathaway’s 13F filing on May 15, 2023, except for: The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker. |
Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.) If you aren't already subscribed to this newsletter, you can sign up here.
Also, Buffett's annual letters to shareholders are highly-recommended reading. There are collected here on Berkshire's website. -- Alex Crippen, Editor, Warren Buffett Watch |
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