Berkshire Hathaway Hits Eight-Month High on Strong Holdings and Alphabet Bet
Berkshire Hathaway's shares have reached an eight-month high due to gains in top holdings like Apple, Coca-Cola, and Bank of America. The stock price has risen about 2.21% year-to-date, compared to a gain of about 9.4% for the S&P 500 Index over the same period.
The immediate driver pushing the stock price upward came from three major holdings in its public equity portfolio: Apple, Coca-Cola, and Bank of America. Since Apple's weight in the public equity portfolio is approximately 20%, it made the largest contribution to the overall increase in net asset value even though its gain was not as high as Coca-Cola's.
Berkshire Hathaway recently completed two major moves under new CEO Greg Abel: acquiring homebuilder Taylor Morrison for $8.5 billion and increasing its stake in Alphabet to approximately $31 billion, making it the fifth-largest holding in the investment portfolio.
UBS analyst Brian Meredith raised his price target on Class B shares to $585 from $570 while maintaining a 'Buy' rating. Barron's previously published an article noting that Berkshire's stock price still lags the S&P 500 Index year-to-date, indicating room for a catch-up rally.
However, whether these optimistic expectations will materialize depends heavily on the recovery of its two major businesses: insurance and railroads. The performance of these two businesses will directly affect the market's assessment of Abel's operating capability.