The pair have long-refused to split the high-priced stock, reasoning that the lofty per-share cost would prove palatable to long-term investors pursuing steady growth and act as a deterrent to short-term traders trying to make the quick score. Berkshire did accede to clamors for a split in its class B stock back in 2009, splitting those shares as part of its acquisition of railroad operator Burlington Northern Santa Fe.
Berkshire's A shares, after rising as high as $201,775, were up 1.1% at $201,759.64 Thursday afternoon, adding $667 million to Buffett's fortune, which now sits at $65.9 billion according to Forbes' Real-Time Billionaires ranking. The
The $200,000 level comes nearly eight years after Berkshire A shares first crossed the $100,000 mark in October 2006. The 104% gain since easily exceeds the 43% price gain and 69% total return achieved by the S&P 500 over the same span. Berkshire famously eschews paying dividends, preferring to reinvest capital across its vast network of businesses, use it for acquisitions or make new investments in its equity portfolio.
Buffett has capitulated to the capital-return crowd in one respect though, instituting a share repurchase program in 2011 when he and his board figured Berkshire stock was too cheap. Initially willing to buy back shares at up to 110% of book value, Buffett upped the premium to 120% a year later.
"[N]ever forget: In repurchase decisions, price is all-important," Buffett wrote in his 2012 letter to shareholders. "Value is destroyed when purchases are made above intrinsic value. The directors and I believe that continuing shareholders are benefitted in a meaningful way by purchases up to our 120% limit."
With Berkshire shares rallying in the bull market of recent years, Buffett has found few occasions to use his considerable financial firepower on his own stock. In September 2011, shortly after announcing the buyback, Berkshire bought $67 million shares before prices climbed above the self-imposed limit. Then in December 2012 the company bought back a slug of A and B shares, $1.2 billion worth, from a single shareholder. The price tag it paid for the A share: $131,000.
The climb to $200,000 has hardly been uneventful for Buffett and Berkshire. The billionaire's 2008 investments in
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Buffett has gone big-game hunting too, buying Burlington Northern and partnering with 3G Partners to buy
Sokol had been touted by some as a potential Buffett successor, but after his departure the succession picture at Berkshire has crystallized to some degree. Todd Combs and Ted Weschler, former hedge fund managers brought on in 2010 and 2011 to handle some of the Berkshire portfolio, will take over Buffett's investing duties, while his son Howard Buffett will serve as chairman. The next CEO of Berkshire remains a mystery, though Buffett has said the board has an internal candidate in place for when the time comes.
Mark Travis, CEO of Jacksonville Beach, Fla.-based Intrepid Capital Management, has owned Berkshire A shares for almost 25 years and says that although the businesses that make up the company have changed in a big way, the heart of Berkshire remains the same.
"I think it's just a giant money machine," says Travis, "and at about 1.4 times book value I still don't think it's that expensive."
The timeline below shows some of Berkshire's highlights over the last eight years.