Berkshire Hathaway Shares Close at Record Highs as Fourth Quarter Rally Reaches 19%

Berkshire Hathaway shares extended their fourth quarter surge this week, with Class A stock posting four consecutive record high closes, bringing the total to 11 record closes since the rally began on Oct. 1. The Class A shares have climbed 19.1% over that stretch, while the more widely held Class B shares, which have closed at new highs 10 times, are also up 19.1% from their recent low.

The advance stands in sharp contrast to a 1.2% decline in the S&P 500 over the same period, as investors appear to be treating Berkshire as a relatively safe haven amid worries about AI stocks and the spending behind them. Both Berkshire share classes rose 3.9% this week, while the S&P 500 gained 2.5% in its best week since early August.

The B shares now lead the benchmark index by 7.5 percentage points for the year so far, with a gain of around 18%. The stock erased the losses that followed Warren Buffett's CEO announcement three weeks ago and is now up almost 10% since last year's annual shareholders meeting and roughly 29% from last August's lows.

Attention now turns to Monday, when Berkshire is due to file its third quarter 13F with the SEC, providing a snapshot of its equity portfolio. Figures in the company's third quarter 10-Q, released last Saturday, indicate Berkshire continued to reduce its Bank of America stake, which would mark a ninth consecutive quarter of selling.

As of June 30, Berkshire reported holding 483.4 million Bank of America shares, currently valued at $24.7 billion, its fifth largest equity position. That compares with just over 1 billion shares worth $41.1 billion on June 30, 2024, before the selling began, a 53.2% reduction in share count even as the bank's stock price rose 28.3%. Had there been no reductions, the position would be worth $52.7 billion.

The expectation of further selling is based on a $372 million reduction in the cost basis of equities Berkshire categorizes as banks, insurance, and finance, along with $2.2 billion in pretax gains from equity sales reported in the 10-Q. Barron's noted that Bank of America and American Express are the only financial stocks in the portfolio with a cost basis low enough to generate such a gain, and estimated Berkshire may have sold 30 million to 40 million BofA shares in the quarter, roughly in line with the 30.2 million sold in the second quarter. Amex is one of four stocks new CEO Greg Abel has indicated will be held for "decades," and Berkshire's nearly 23% stake would have required quick disclosure of any sales.

Barron's also suggested Berkshire may have added to its Alphabet holdings during the period, citing a $2.3 billion increase in the cost basis for the category that includes Google's parent company. Overall, the quarter appears to have been relatively quiet, with about $2.4 billion in equity purchases against $2.8 billion in sales, figures that exclude the $9.6 billion Berkshire spent repurchasing its own shares in the third quarter.

Separately, Berkshire said in a term sheet filed early Friday that it is selling more than 182 billion yen ($1.1 billion) worth of bonds, with maturities between 2029 and 2056 and annual interest rates between 2.6% and 4.6%. Bloomberg pointed out that the rates, relative to benchmarks, are higher than in Berkshire's April sale of 272 billion yen ($1.7 billion) in bonds, quoting a fund manager who said market sentiment "has become more sensitive," forcing issuers to make their offerings more attractive. Berkshire uses proceeds from yen-denominated bonds to protect its ongoing investments in Japanese stocks from currency fluctuations.

Berkshire ended September with $377.4 billion in cash, up 3.3% from June 30, and its market capitalization now stands at roughly $1.26 trillion.