The world’s biggest investor Warren Buffett’s company Berkshire Hathaway on Wednesday crossed the market cap of $1 trillion (about Rs 84 lakh crore) for the first time. It is the world’s first non-tech company to achieve this milestone. 6 more companies have reached this milestone. The company achieved this feat when it sold shares worth Rs 8,245 crore of Bank of America, the second largest company in its portfolio. This sale has been done in the last few weeks. The company has sold 12.9 crore shares of Bank of America for Rs 45,338 crore (5.4 billion dollars) since July. This year, Bank of America’s shares have increased by 31%. Some experts are seeing this as a sign of change in Buffett’s long term investment strategy. Earlier, he had sold 38.9 crore shares of Apple. Three reasons for Buffett to sell his favorite shares… 1. Raising cash for successors, so that they get a free hand
Buffett is turning 94 years old tomorrow i.e. 30 August. Recently, in the company meeting, Buffett had said that he is feeling well, but at this age he must have concrete plans for his successors in mind. He said that the company’s increasing cash is the result of not being able to find good shares. In such a situation, Buffett wants to give a lot of opportunity to his successors. If he invests Rs 16 lakh crore of cash, the role of his successors will be limited. They may feel hesitant to change Buffett’s decision. 2. Corporate tax is expected to increase from 21% to 35%, in such a situation he is booking profit
On reducing stake in Apple, Buffett said, ‘I am worried about tax. We are paying 21% tax on booking profit from Apple. This rate was 35% earlier and before that it was 52%. The tax rate was reduced from 35% to 21% under the 2017 Tax Cuts and Jobs Act. However, these cuts are set to expire next year and the old rates will be applicable. Apple’s valuation will not be that cheap at these rates. 3. Buffett is saddened by Bank of America’s Rs 9 lakh crore loss
Bank of America’s P/E ratio is much lower than Apple’s, at 15 times earnings, but it is near the highest level in the last seven years since Buffett has owned the stock. Bank of America’s net interest income also saw a decline in the recent quarter. As of March 31, Bank of America had a loss of Rs 9 lakh crore ($109 billion), the largest in the banking industry. Buffett bought these shares when investors were panicking
Berkshire Hathaway still owns 90.38 crore shares of Bank of America, worth a total of Rs 3.01 lakh crore ($35.9 billion). This investment is Buffett’s second-largest stock holding. Buffett has not disclosed the reason behind this decision. Buffett kept this stock even when he sold almost all of his other financial stocks between 2020 and early 2023. Berkshire’s market cap grew at an annual rate of 20%
Berkshire’s market cap has grown by about 20% per year from 1965 to last year. This is about double the annual return of the SP 500 in that time. This has made Buffett one of the richest people in the world and perhaps the smartest investor ever. The company’s market cap has increased by Rs 16.79 lakh crore this year. Buffett started taking shares of Bank of America in 2011 after the 2008 recession, when other investors were worried about investing in the banking industry. Then Bank of America shares were close to $ 5. Now it is at $ 39.67. Read this news too… Warren Buffet sells half of his stake in Apple: Cash stock rises to ? 23.20 lakh crores, 7th richest person in the world American billionaire and investor Warren Buffet’s company Berkshire Hathaway Inc has sold nearly 50% of its stake in iPhone maker Apple. After this sale, Warren Buffet’s cash stock has risen to a record $276.9 billion (about Rs 23.20 lakh crores). Click here to read the full news…
