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Warren Buffett’s Berkshire Hathaway has reached a new record high, contributing to its valuation growth of over $100 billion this year. This increase is equivalent to the combined value of Ford and Halliburton. Despite the negative impact of the cooling US economy on some of its major portfolio companies and a lack of new investments, investors are still attracted to Buffett’s conglomerate, which is now valued at $780 billion.
Longtime investors believe there are valid reasons for Berkshire’s 16% increase in share value this year. Christopher Rossbach, chief investment officer of J Stern & Co, a longstanding shareholder, highlights the resilience of the economy and Buffett’s exposure to good businesses as positive factors.
Retail traders are among the investors who have contributed to the stock’s new highs. Goldman Sachs’ analysis of trading data reveals that retail investors have placed more buy orders than sell orders for Berkshire shares. JPMorgan Chase strategists note consistent demand for the company’s cheaper B shares and its traditionally quieter market for class A stock.
Berkshire’s second-quarter results demonstrate what is fueling investor enthusiasm. The quarter’s profits reached nearly $36 billion, including $10 billion of operating earnings, indicating a 6.6% increase compared to the previous year. Geico, the company’s auto insurance unit, posted a second consecutive quarterly profit after a year of losses, which further boosted investor confidence.
Buffett’s report on the lack of appealing investment opportunities did not deter investors. Berkshire was a net seller of stocks in the second and first quarters, opting to invest in short-term government debt. The interest income from Berkshire’s cash and Treasury bill portfolio is set to exceed $5 billion this year.
Investors see these positives outweighing the negatives. The rise in operating profit is partly attributed to Berkshire’s recent acquisitions and its stake in Occidental Petroleum. The performance of Berkshire’s stock portfolio, particularly its stake in Apple, has significantly contributed to the company’s share price.
Despite challenges in certain sectors, such as shipping revenues and the housing market, investors remain focused on Buffett’s investment decisions. Berkshire’s ownership of PacifiCorp, which faces wildfire-related claims, did not raise significant concerns among shareholders.
Overall, an optimistic stock market, along with successful investments, has driven Berkshire’s rise. Buffett’s reputation and expertise are once again in the spotlight, with investors recognizing his enduring ability to make astute investment decisions.
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