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Berkshire’s Blast-Off a Boon for These ETFs


One of Thursday’s more notable news items pertaining to an individual stock is the ascent of Warren Buffett’s Berkshire Hathaway (BRK-A) to $200,000 per share. Shares of the financial services conglomerate are up just 0.9% at this writing, but in dollar terms, that works out to a gain of $1,776 and that is enough to have the stock trading at $201,385.

Given the lengthy track record of Berkshire’s A shares trading in six-digit territory, that share class is not an integral part of many ETFs. In fact, S&P Capital IQ data show Berkshire’s class A shares are not a top-10 holding in any ETF. However, Berkshire Hathaway (BRK-B), the company class B stock, is a top-10 holding in nearly 50 ETFs, according to S&P Capital IQ.

Predictably, the ascent of Berkshire’s A shares is good news for the B shares, the latter of which are 1.1% today and earlier touched a new all-time high. And that is good news for a raft of familiar financial services ETFs, plenty of which have been in dire need of some good news. [Bank ETFs Need Some Good News]

Start with the Financial Select Sector SPDR (XLF) . Berkshire’s rise, the B-shares are up nearly 18% in the past 18 months, put the stock into a tie with Wells Fargo (WFC) as XLF’s largest holding at a weight of 8.62%. Interestingly, California-based Wells Fargo is one of Berkshire’s largest equity holdings. Said another way, XLF’s weight to “Berkshire B” is more than triple its exposure to American Express (AXP), another long-standing Buffett holding.

Investors looking for an ETF that features dominating exposure by Berkshire’s B shares can consider the RevenueShares Financials Sector Fund (RWW) . RWWshows revenue weighting can work at the sector level. RWW debuted in November 2008, a launch date that initially looked like a case of poor timing, but the ETF has managed to gain nearly 171% since then. The ETF features a 13.7% allocation to Berkshire’s class B stock, nearly 640 basis points more than the weight give to J.P. Morgan Chase (JPM), the ETF’s second-largest holding. [Revenue Weighting With Bank ETFs]

RWW is up 1% today while XLF is higher by 0.6%.

The Market Vectors Wide Moat ETF (MOAT) , which has previously been framed as an ETF Buffett himself would love, has a 5.1% weight to Berkshire. MOAT is an equal-weight fund where no individual holding exceeds a weight of 5.43%, so Berkshire’s presence in the ETF is significant.

I n addition to owning shares of Berkshire B, MOAT holds several stocks found in Berkshire’s equity portfolio, including Coca-Cola (KO), IBM (IBM), MasterCard (MA) and Procter & Gamble (PG). MOAT is up 0.5% today. [Wide Moat ETF Delivers Sound Performance]

RevenueShares Financials Sector Fund


Tom Lydon’s clients own shares of MOAT and P&G.