While the stock market is being sold recently, a stock market that has covered the trend is Berkshire Hathaway (Nyse: brk.b) (Nyse: brk.a). His shares have increased by more than 15% to this day, and shares are trading near a high level.
Let’s look at why Berkshire has surpassed the market and whether the actions are buying at the present level.
One of the biggest reasons for Berkshire’s strong performance in the market is the huge position of Gotovina it has built. The company essentially acts as an investment vehicle for its CEO and the famous investor, Warren Buffett. Berkshire is a conglomerate that owns business activities in various sectors, but Buffett is a particular fonduer for insurance companies, as he gains access to capital through their float.
Float is simply money insurance companies collecting from policies and holding until the claim is paid. Most insurance companies take this money and invest it in fixed income instruments as bonds to generate revenue. However, Buffett avoided this typical insurance company strategy in favor of investing in high quality actions.
It is a unique strategy in the industry that has played Berkshire to be the largest companies in the world by the Cap market. However, over the past few quarters, Buffett was much more interested in selling stocks and making money than investing. In fact, last year he only bought shares worth about $ 9 billion while selling more than $ 143 billion. This involves a significant reduction in positions in its top farms, such as Apple And Bank of America.
Combined with the cash flow the company generated for the year, this left Berkshire with a whopping $ 334 billion in cash at its balance sheet at the end of the year. In the investment industry, this is known as dry powder, which is essentially money on the sidelines that can be used to make investments. Berkshire currently has a lot of dry powder and one of the biggest investors of all time at the head of buying stocks when it feels that time is right.
Now simple market correction may not be enough to return Buffett for aggressive purchase stocks. Began to withdraw from the stock in the first half of 2024 and the main market indexes like S&P 500 They are still higher than they were at the end of June 2024. However, if some individual actions become attractive, Buffett has a lot of money to deploy.
Although this current market environment attracts investors in Berkshire’s dry powder, it does not have to make the stock well -purchased at the present level. In addition to selling shares over the past year, Buffett also decided to stop buying Berkshire’s shares.
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