Warren Buffett’s conglomerate is on the verge of surpassing $1 trillion in market capitalization for the first time, putting the spotlight on the investor’s nearly six decades of astounding success.
Berkshire Hathaway’s Class B shares have risen 29% this year, far outpacing the 18% gain in the S&P 500. The company’s market capitalization hit a record $993 billion as of Tuesday’s close, and it needs to rise just 0.8% to reach the $1 trillion mark.
It’s an astonishing feat, considering that Berkshire had two textile mills and about 2,300 employees when Buffett first took control in early 1965. Berkshire’s after-tax profits in 1968 were less than $5 million, according to Buffett’s partnership letters.
Nearly 60 years later, Berkshire owns a host of businesses, including Geico, BNSF Railroad and Jazware Co., which makes Squishmallows, and has billions of dollars’ worth of stock in publicly traded companies such as Apple Inc. and Coca-Cola Co. It had operating profits of more than $37 billion last year and employed about 400,000 people as of the end of December.
Berkshire Hathaway owns BNSF Railway. Matt Jonas/Boulder Daily Camera
Berkshire Hathaway’s continued growth has made it the seventh most valuable publicly traded company in the U.S., more valuable than Eli Lilly ($859 billion), Broadcom ($751 billion) and Tesla ($665 billion), but less valuable than Meta Platforms ($1.3 trillion).
Buffett’s net worth has increased by $25 billion this year, putting him eighth on the Bloomberg Billionaires Index at $145 billion.
headache
A trillion-dollar Berkshire has seemed inevitable for some time, given that Berkshire had $1.1 trillion in assets at the end of June, including $277 billion in cash, Treasury bonds, other liquid assets and short-term investments.
Buffett, who turns 94 on Friday, may be celebrating a $1 trillion market cap, but he may also be worried. He has frequently cited Berkshire Hathaway’s rapid expansion as a headache, making it harder for him to find quality investments big enough to move the stock price.
A shareholder asked Buffett what a $1.2 trillion Berkshire Hathaway would look like at the company’s 2014 annual meeting, with the Oracle of Omaha seeming concerned about what attractive acquisitions its sheer size could make.
“At some point you’re going to have more cash than you can sensibly deploy,” Buffett said, suggesting Berkshire shares might still be attractive to buy back. That question may be on Buffett’s mind as the company approaches a new valuation milestone.
