Berkshire Hathaway shares hit US$200k

LUCIANA LOPEZ AND JONATHAN STEMPEL
Last updated 12:32 15/08/2014

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Berkshire Hathaway share price has surpassed and closed above US$200,000 (NZ$235,000) for the first time, the latest milestone for a company that Warren Buffett has built over nearly five decades into what some analysts view as a microcosm of the US economy.

Class A shares of Berkshire, which have never been split, closed up US$3,500, or 1.8 per cent, at US$202,850, giving the Omaha, Nebraska-based company a market value of more than US$333 billion. The share price had earlier risen as high as $203,025.

Berkshire's share price has more than doubled since it first crossed the US$100,000 barrier on Oct. 5, 2006.

The Standard & Poor's 500 has climbed just 44 per cent since that date.

Buffett, who turns 84 on August 30 and is the world's third-richest person, oversees a conglomerate with more than 80 businesses ranging from Geico car insurance to the BNSF railroad to Dairy Queen ice cream, and more than US$119 billion of stocks such as Wells Fargo and Coca-Cola.

In the second quarter, Berkshire Hathaway posted a record US$6.4b profit, helped by a stock swap and growing earnings in many businesses, on revenue of US$49.76b.

By some measures, Berkshire remains moderately priced, trading at about 1.4 times its book value, a measure of assets minus liabilities, in the most recent quarter. Buffett has said he will consider buybacks only at or below a 1.2 times multiple.

Berkshire also has lower-cost Class B shares, which Buffett launched in 1996 to thwart unit investment trusts purporting to be "clones" of Berkshire but which carried high costs.

Those shares now trade at about 1/1,500th of a Class A share and carry voting rights equal to 1/10,000th of a Class A share. They closed on Thursday up US$2.22, or 1.7 per cent. at US$135.30.

Since 2006, Buffett has been donating Berkshire shares to several charities. He still owns about one-fifth of Berkshire, which was a failing textile company before he took it over in 1965, and controls about one-third of its voting power.

Buffett's net worth was about US$66.3 billion after Thursday's US market close, Forbes magazine said. 

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- Reuters

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