Berkshire Hathaway's Class B shares closed at an eight-month high this week, narrowing a performance gap against the S&P 500. Gains in the Apple, Coca-Cola and Bank of America stakes, plus a price-target increase from UBS, are lifting the stock, while investors await second-quarter results and a buyback figure due August 8.
Berkshire Hathaway's Class B shares closed at $512.37 on Tuesday, their highest level since November 28, when they finished at $513.81. The rally comes as the stock keeps closing a performance gap against the benchmark index.
Rally narrows gap with the S&P 500
Berkshire still trails the S&P 500 by 7.6 percentage points, but that gap has narrowed. The stock has erased more than half of a 17.5 percentage-point deficit that existed just two months ago. Barron's called the rally "has room to run", even as Berkshire trails competitors in the railroad and insurance sectors.
Friday's close of $511.54 left the B shares down 5.2% from their all-time closing high of $539.80, set on May 2 last year, the day before Warren Buffett revealed he would step down as CEO at the end of 2025. The Class A shares followed the same pattern, closing Tuesday at $768,010 — also their highest since November 28 — before slipping to $766,600 on Friday, 5.3% below their all-time closing high of $809,350.
Portfolio holdings power the gain
Three of Berkshire's largest equity stakes are also lifting sentiment. Apple, its largest holding, is up 13.6% so far this year and now worth more than $70 billion.
Coca-Cola, the third-largest position at $35 billion, has jumped 25% year-to-date after posting earnings ahead of expectations and raising its full-year outlook. Meanwhile, Bank of America, the fourth-largest holding, is up 12.6% on the year and now valued at almost $32 billion.
Analyst raises price target amid buyback report
Tuesday's roughly 3% gain in the shares may have been partially fueled by UBS analyst Brian Meredith raising his price target on the B shares to $585 from $570, and on the A shares to $877,848 from $854,596. Meredith kept his buy rating and also welcomed a Barron's report that Berkshire appeared to have bought back as much as $11 billion of its stock in the second quarter.
Source: US Top News and Analysis
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