Warren Buffett, the CEO and chairman of Berkshire Hathaway, has expressed that the large scale of his corporation and limited potential acquisitions may lead to its performance being only marginally better than the average US business. The Omaha-headquartered corporation, which has diversified holdings ranging from BNSF Railway to Dairy Queen and possesses a 6% stake in Apple, has the highest net worth among US businesses, and now accounts for 6% of the net worth of all S&P 500 companies, as Buffett stated in his annual letter on Saturday.
Buffett noted in his letter that few American companies have the capability to significantly influence Berkshire Hathaway’s performance, as they have all been extensively studied by his company and others. The conglomerate’s last notable deal was the acquisition of insurance company and conglomerate Alleghany for $11.6 billion in 2022. The “Oracle of Omaha” also secured a 28% stake in energy conglomerate Occidental Petroleum but has ruled out a full acquisition. Despite these noteworthy ventures, they haven’t materialized into the “elephant-sized” targets that Warren Buffett has desired for a while.
Berkshire Hathaway had a cash reserve amounting to a record $167.6 billion at the end of the last quarter. Buffett further commented that there are practically no significant investment chances for Berkshire outside the US, making an exceptional performance highly unlikely. Nonetheless, Berkshire Hathaway has managed to acquire a 9% stake in five Japanese trading corporations namely Itochu, Marubeni, Mitsubishi, Mitsui and Sumitomo, which Buffett plans to retain for the long term.
The 93-year-old CEO maintains that the mix of high-quality, diversified businesses within Berkshire should yield a slightly superior performance compared to the average US corporation. However, expecting any further performance would be mere wishful thinking. Berkshire Hathaway’s stocks have recently achieved consecutive record highs, with Class A shares trading at over $620,000 and a market value surpassing $900 billion. The stocks of the conglomerate have seen an approximate 16% rise in 2024, outperforming the S&P 500′s return twice over, after a similar 16% surge in the entirety of 2023.
