By Jonathan Stempel
– The share price of Warren Buffett’s Berkshire Hathaway Inc reached $500,000 for the first time on Monday, reflecting the company’s status as a defensive stock in a market unsettled by events in Ukraine and rising inflation.
Berkshire’s Class A shares have risen 10% in 2022, outpacing the Standard & Poor’s 500 index, which has fallen 12%.
The Omaha, Nebraska-based company’s market value is approximately $731 billion, ranking sixth in the United States, and Buffett’s 16.2% stake makes him the world’s fifth-richest person at $119.2 billion, according to Forbes magazine.
Berkshire generated a record $27.46 billion of operating profit last year, including gains at Geico car insurance, the BNSF railroad and Berkshire Hathaway Energy.
It also owns dozens of other businesses, including the fast-growing Clayton Homes mobile home unit and the largest U.S. residential real estate brokerage.
Berkshire specializes in “on the ground, Main Street-esque business activity,” said Bill Smead, chief executive of Smead Capital Management Inc in Phoenix, which invests about $4.3 billion and owns Berkshire stock.
“They’re big and they’re not a tech stock, and investors get comfort from that.”
Berkshire shares also slightly outperformed the S&P 500 in 2021, after lagging in 2019 and 2020. They closed up 0.8% on Monday at $493,785.
Most Berkshire operating units focus on the United States, and about 77% of its approximately 372,000 employees work there.
Among those expanding elsewhere is Dairy Queen, which plans by 2030 to add 600 stores in China, already its largest market outside the United States.
Berkshire traded below $20 when Buffett took over the then-struggling textile company in 1965. Its Class B shares are worth about 1/1500th of Class A shares.
U.S. companies with larger market capitalizations include Apple Inc, Microsoft Corp, Alphabet Inc, Amazon.com Inc and Tesla Inc. Apple is also Berkshire’s largest common stock holding.
Berkshire ended 2021 with $146.7 billion in cash, though it has since invested well over $5 billion in Occidental Petroleum Corp as oil prices soared.
(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)