Warren Buffett's Berkshire Hathaway Stock Looks Attractive After Recent Dip, Apple Rally Boosts Book Value

Berkshire Hathaway Inc. BRK BRK shares have become more appealing due to a recent drop in stock price and a surge in book value, largely driven by the rally in Apple Inc. AAPL shares.

What Happened: The stock of Berkshire Hathaway, led by legendary investor Warren Buffett, has seen a 1.1% drop in its Class A shares, which are now priced at $609,000, reported Barron’s on Tuesday.

Despite this, the Class A shares are still up 12.2% this year, slightly ahead of the S&P 500’s 11.8% total return, including dividends. The company’s Class B shares are up 13% this year, trading at $403.90 on Tuesday.

The valuation of Berkshire has decreased to under 1.5 times the estimated Jun. 30 book value from over 1.6 times in late February. The stock now trades close to its five-year average of 1.4 times book value.

Analyst Cathy Seifert from CFRA is optimistic about Berkshire, having raised her 2024 and 2025 earnings estimates following the company’s strong first-quarter earnings report. Berkshire now trades for under 21 times her above-consensus 2024 profit estimate of $19.55 per Class B share.

Seifert has set a price target of $472 on the B shares, 16% above the current price.

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Why It Matters: The recent performance of Berkshire Hathaway’s stock is significant in the context of Buffett’s investment strategies. The company’s stock has been impacted by its holdings, particularly Apple, which has seen a notable increase in value.

This is in line with Buffett’s long-term investment approach, as he has often emphasized the importance of holding onto quality stocks for the long term, as seen in his recent investments and his advice on the best investment to beat inflation.

Berkshire’s shareholder equity, already the largest in the U.S. stock market, has been further bolstered by the 11% rise in Apple shares, the company’s largest holding at about 40% in Berkshire’s $370 billion equity portfolio. Apple finished Tuesday at $190, and Berkshire held approximately 790 million shares of the tech giant on Mar. 31.

Berkshire's shareholder equity could reach $600 billion by June 30, nearly double that of the second-largest company, JPMorgan Chase. This milestone is particularly impressive considering Berkshire had less than $50 million in shareholder equity when Warren Buffett took control in 1965, according to the report.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote