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Warren Buffett's Berkshire Class A Stock Hits $200,000 a Share

Zacks Research Staff

August 14th, is an important date for Warren Buffett’s giant conglomerate Berkshire Hathaway, as its class A stock, (BRK.A), surpassed the $200,000 price tag per share, about a 1.07% increase from yesterday’s market close. This is undoubtedly a very important milestone for the company, and for investors who have had this stock in their portfolios for quite some time.

Gains were also seen in the company’s much more affordable class B stock, (BRK.B), which saw an increase by around 1.06%, or $1.42. BRK.B also saw an increase in its volume, with approximately 1.5 million shares traded today on the NYSE, which is higher than the average.

Recent Berkshire Moves

The increase in prices that saw (BRK.A) beat the $200,000 mark comes as the conglomerate poached two senior executives in Asia from AIG’s (American International Group) operations in Asia. Berkshire Hathaway did so as part of its vision to establish its insurance arm, Specialty Insurance, as a solid insurer in Asia. Berkshire Hathaway hired Marc Breuil and Marcus Portbury, former heads of AIG national operations in Taiwan and Hong Kong, and casualty insurance in Asia and Oceania, respectively.

This is a great business decision by Berkshire Hathaway as Specialty Insurance will serve many of the different social classes in the Asian continent, and more specifically its ever-growing middle class. Asia has relatively seen strong economic growth for quite some time now, and it was only relatively recently the region attracted international financial businesses.

According to the consultancy arm of accounting firm Ernst & Young, China is the world’s third largest nation for automobile insurance, while Indian and Indonesian insurance companies are still seeing difficulty in covering their populations.

This can be an excellent foray for Hathaway into the Asian market as the insurance sector is destined for success not only due to insufficient government spending on key social areas (such as healthcare) in many South Asian countries like Thailand, Indonesia, and India, but also because many in Asia’s middle class will be able to afford coverage, and depending on Specialty Insurance’s pricing, they can stand to steal clients from other domestic insurance companies.

What does the future hold for Berkshire Hathaway, Inc.?

Both of Berkshire Hathaway’s classes have good prospects in the long-run, due to the aforementioned reasons, as well as its strong Q2 earnings results. As of now, (BRK.A) maintains a Zacks Rank #2 (Buy), while its offshoot (BRK.B) also maintains an identical rank. We are likely to see a pullback in the near future, after the recent strength in Berkshire shares, so short term investors may be wise to sell soon.

Still, for those with a longer term outlook, estimates have universally been revised higher in the past two months for both classes of the stock, while the EPS projection for (BRK.B) in the full year has slightly increased from $6.72/share 30 days ago to $6.85/share today. EPS projection for (BRK.A) in the full year has also slightly increased from $9379.38/share 30 days ago to $9579.33/share today.

Given this, investors might see more gains out of BRK.A and BRK.B to close out the year, suggesting that even at over $200,000/share, Berkshire may still have a bit more room to run.

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