While a veritable wave of figures is sweeping across the stock market here in Germany this week, the reporting season has largely run its course in the USA. By the end of last week, 89% of the companies listed in the S&P 500 had already opened their books. 81% of them managed to beat analysts’ expectations. Berkshire Hathaway (BRK-B), the investment company of the legendary Warren Buffett, did not manage to do so.
Nevertheless, the results were received warmly. The share marked a new all-time high in yesterday’s trading. There are some indications that after a longer sideways movement, the long-term upward trend will soon go into the next round.
Warren Buffett is now 91 years old. The famously-down-to-earth Nebraskan enjoys cult status among investors. He has made many Americans millionaires. Shareholders who joined Berkshire more than 50 years ago for $1,000 now own shares worth almost $10 million.
Buffett Relies Primarily on Share Buybacks
In recent years, however, Buffett has repeatedly faced criticism. He has found it difficult to make new investments and his fantastic performance has diminished somewhat over the last few decades. But this isn’t necessarily his advanced age. Because of its size, it is simply becoming more and more difficult for Berkshire Hathaway to find suitable investment opportunities in which it won’t distort markets.
As the latest quarterly report shows, Berkshire is now sitting on a cash mountain of $143 billion. Instead of investing in other companies, Buffett continues to buy shares in his own company. In the past third quarter, he put about $7.6 billion into share buybacks. In total, Buffett has already invested $20.2 billion in his own shares so far this year.
The global supply chain crisis has also caused problems for Berkshire Hathaway and its subsidiaries in the past quarter. The holding company generated an operating profit of $6.47 billion, up 18% from a year earlier, but short of analyst expectations. Sales grew 12% to $70.58 billion.
Long-Term Upward Trend to Continue
Warren Buffett’s long-term performance has been impressive. Over a period of years, Berkshire stock has performed extremely well. Even if it doesn’t match its previous growth rates, the investment company remains interesting, especially for long-term investors.
Yesterday, the share price marked a new all-time high of just under $296 in the course of trading, but then fell back again. The breakout above the previous high of mid-May at $295 hasn’t quite panned out yet, but it should soon. In this case, the long-term upward trend will go into another round. Over the next few months, prices between $340 and $350 are a realistic target.