Warren Buffett's Berkshire Hathaway hits a record stock price above $500,000 as investors bet on the 'Sage of Omaha'
- Berkshire Hathaway's stock price closed above $500,000 Wednesday for the first time ever.
- The conglomerate's Class A shares are up 12% so far this year, while the S&P 500 is down 8.5%.
Warren Buffett's Berkshire Hathaway hit a record stock price above half a million dollars Wednesday, reflecting its status as a defensive stock even as financial markets bear volatility in the midst of Russia's war and a tight Federal Reserve.
The conglomerate's Class A shares rose 1.18% Wednesday to close at $504,036 a share, and are up 11.8% so far this year. In comparison, the S&P 500 is down 8.5% in the same period.
Meanwhile, Berkshire's Class B shares closed 1.07% higher at $336.11 a share, up 12.4% year-to-date.
Berkshire's Class A shares, the company's original offering which is far-less-traded, broke the $500,000 mark Monday, but closed just slightly below that level at $497,922 a share.
They've hit such a towering level because Buffett has resisted splitting the stock ever since he purchased the company with majority share control in 1965. Back then, Class A shares traded at around $19 a share.
Buffett — known as the "Oracle of Omaha" — is known for his buy-and-hold investment philosophy. The longtime chairman and investing icon believes that a high price of admission to the Class A shares attracts high-quality investors that are focused on long-term growth and profitability of the company, rather than short-term price moves.
But Berkshire issued convertible Class B shares for one-thirtieth of the Class A price in 1996 to cater to demands for a cheaper option. Performance in both classes of shares shows investors are betting on defensive stocks as they question the economic outlook.
"Don't -- EVER -- underestimate the power of long term compounding, if you own quality businesses," Motley Fool Australia's chief investment officer, Scott Philips, said in a tweet about Berkshire's record stock price.
The Ukraine crisis, soaring inflation, and accompanying lower investor confidence mean investors have looked for safe bets as they seek to add to a more risk-averse portfolio compared to last year.
Lockdowns in China over a new flare-up in COVID-19 alongside Russia's war have sparked a great deal of uncertainty in markets. But it seems as though Berkshire has been largely unmoved by these events.
"Remember, as Warren Buffett himself would remind us, the market is here to serve us, not to inform us," Philips wrote in a blog. "It's up to us to make the right decisions."
Wednesday's stock move takes Berkshire's market capitalization to $731 billion, and it is the sixth most valuable company in the US. Apple, Microsoft, Alphabet, Amazon, and Tesla have bigger market values.
Apple is by far Berkshire's largest holding in its US stock portfolio, accounting for a 47.6% stake as of December 2021.
Buffett's 16.2% stake gives him a net worth of $122 billion, making him the fifth-richest person in the world, according to the Bloomberg Billionaires Index.
Buffett's conglomerate owns dozens of businesses including See's Candies, insurance company Geico, and the BNSF railroad. Its overall revenue rose 12% to $276 billion in 2021 as sales grew across its insurance, railroad, utilities, energy, and other main divisions.
Even as it was hit with supply chain disruptions due to COVID-19, the company managed to grow pre-tax earnings from its operating businesses by 19% to $32 billion.
Buffett's most recent portfolio update was an investment in Occidental Petroleum, boosting his bet on the energy stock to $7 billion in less than two weeks.