Berkshire Hathaway Inc. (BRK.A): Can Buffett’s Baby Crawl Above Its 52-Week High?

Page 1 of 2

The A class shares of rock star investor Warren Buffett’s vehicle Berkshire Hathaway Inc. (NYSE:BRK.A) reached a 52-week high on Friday. Let’s take a look at how it got here to find out if the famed company’s stock price can grow even higher.

Berkshire Hathaway Inc.

How it got here Buffett is celebrated and followed because he regularly beats the market. So it stands to reason that when the Dow advances, Berkshire Hathaway’s stock price not only gains too, it trumps the index. Take any time frame you’d like — Buffet’s child will almost always win handily against the DJIA. That applies to the short term, let’s say the past three months:

 Chart

Data by YCharts.

A slightly longer string of time, one year:

 Chart

Data by YCharts.

Or even a full decade:

 Chart

Data by YCharts.

Buffett, an eminently quotable guy, has been making his usual pronouncements and prognostications of late, but he hasn’t said or revealed anything jolting enough to move the stock on its own. Rather, the stock price advance seems largely to be due, like the success of the firm it constitutes, to strong improvement in fundamentals over time.

Berkshire Hathaway earnings saw marked gains in 3Q, the company’s most recent reporting period. Net came in at $3.9 billion, a fat 72% advance over the same time frame the previous year. Zooming out by a factor of three, the same figure for 1Q-3Q last year was a little over $10 billion, or 43% better than the same period of 2011.

These were on the back of across-the-board revenue growth in each of the firm’s three business lines. The heart of the company is its insurance and related operations, and these beat loudly with a 15% year-on-year advance in the most recent quarter. Railroad, utilities, and energy chugged and beamed along well, growing 8%, and the take from finance was positive that quarter, at a little over $1 billion… as opposed to the $1.45 billion shortfall posted in 3Q 2011.

Banking on profits With large-scale banks weighing in with results recently, Buffett has been hit by the spotlight, too. In mid-2011, Berkshire Hathaway took a $5 billion stake in Bank of America Corp (NYSE:BAC) . This was a classic contrarian move by the cagey investor, made at a time when the company was still flat in the mud, trying to wash away the grime of the crisis era.

As so often happens, his timing was magnificent, and he got a sweet deal. On the day the buy was announced, B of A’s stock price was a soggy $7.55. Now, even after the bank’s market-displeasing results last week, they still trade at a nearly 50% premium.

Smart Warren holds preferred shares that carry a rich 6% dividend. What’s more, the buyer will probably be B of A itself — after all, what respectable bank drawing a few percentage points on its long-term debt wants to keep forking over that high a disbursement? B of A will pay a 5% fee for the privilege of retiring those preferreds, or a cool $250 million.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!