Warren Buffett Triumphs Once More: Berkshire Hathaway's Class A Shares Breach $600,000 Mark, What's Next?

Buffett's decision not to split the expensive A-class shares is because he seeks to attract high-quality value investors who are focused on the long-term growth and sustainability of the companies. In the past two years, the legendary investor has also made several major moves, including the $11.6 billion acquisition of Alleghany Insurance, a significant investment in energy stocks, and investments in the five major Japanese trading companies.

According to Berkshire Hathaway's latest 13F filing released last week, the company's equity holdings increased by approximately 12% in Q4 2023. While the company reduced its holdings in Apple, a long-time top holding, it increased its investments in energy stocks during the quarter.

It is worth noting that the company has kept its secret holdings for a second consecutive quarter with SEC approval, which may involve financial stocks such as banks, financial companies, or insurance companies. As of the end of September 2023, Berkshire Hathaway's cash balance reached a historical high of $157.2 billion, leaving investors eager to know how Buffett will allocate these funds.

Based on data from YCharts, Berkshire Hathaway-A currently has a P/E (TTM) of around 11.6 times, which is lower than the median value of 13.40 in the past 5 years and the 5-year average of 24.07. Compared to the tech giants facing overvaluation concerns, Berkshire Hathaway appears to have a stronger safety margin among the top ten stocks regarding market capitalization. As of last Friday's close, the stock's market value was approximately $880 billion, only about $120 billion away from the milestone of $1 trillion. With the stock price continuing to rise, it is poised to become the only non-tech company in the trillion-dollar market value club of the US stock market.

In addition, according to Strategas Securities, considering the market value weight and earnings contribution to the S&P 500 index, Berkshire Hathaway is the most promising candidate to replace Tesla and enter the Mag 7. The other two potential newcomers are Broadcom and Eli Lilly.

Berkshire Hathaway is expected to release its annual report and letter to shareholders on February 24, 2024, which will provide more detailed financial data and investment and business details. According to Bloomberg Intelligence, the company's insurance profits are expected to increase significantly in Q4 2023, mainly due to rising interest rates, a decrease in catastrophic losses, and improved underwriting performance from Geico. Boosted by this, the company's operating profit in Q4 is expected to grow by over 20% compared to last year, reaching a range of $9 billion to $10 billion.

"Though repurchases can bounce around, we don't think they'll get much higher than the recent $1-$2 billion band," wrote Bloomberg analyst Matthew Palazola.