The stock with the highest face price in the world tested $100,000 mark Thursday, as the price for a Class A share of Berkshire Hathaway Inc. (BRK-A) briefly surpassed $100,000. Berkshire Hathaway is run by Warren Buffett, the greatest investor ever. Yesterday the shares closed up $1,296, or 1.3%, at $98,995 on volume of 830 shares, more than twice the average daily volume. During the session, shares reached $100,100 - an all-time high.
Since 1965, the earnings per share of Berkshire stock has increased from $4 to more than $2,400 in 2005, the book value of Berkshire class A stock has increased from $19 to more than $59,000. During the past 41 years, Berkshire never split it stock. In 1996, Berkshire created Class B shares, which are which are worth about 1/30 of Class A shares. At the end of June, there were 1.13 million shares of the more expensive Class A variety and 12.41 million Class B shares in existence. The market cap of Berkshire Hathaway is $152 billion as of yesterday.
Berkshire owns reinsure giant General Re and National Indemnity, it also owns fast-growing Geico, the fourth-largest U.S. auto insurer. Berkshire Hathaway also has substantial stock holdings of several major U.S. companies. At the end of 2005, it owned 12.2% of American Express Co. (AXP) shares, 18% of Washington Post Co., 8.4% of Coca-Cola Co. (KO), 0.5% of Wal-Mart Stores Inc. (WMT), and 5.7% of Wells Fargo & Co. (WFC), among others.
Is this seemingly expensive stock really expensive? According to Bruce Berkowitz, the star manager from the Fairholme Fund, “ Berkshire’s share price has grown in line with increases in the company’s investments and shareholders’ equity. However, the company’s market value has not kept pace with non-insurance operating earnings that will have more than quadrupled with recent acquisitions.” Other value investors like Charles de Vaulx also think Berkshire Hathaway worth more.
At $100,000, is Berkshire still a good investment? In Buffett’s own words: “I regard Berkshire as an ideal asset to underpin the long-term well-being of a foundation. The company has a multitude of diversified and powerful streams of earnings, Gibraltar-like financial strength, and a deeply-imbedded culture of acting in the best interests of shareholders. . . . I expect Berkshire to become ever-stronger and more profitable as it makes new acquisitions and expands present businesses.”