During a broadly lackluster week of trading, Berkshire Hathaway (BRK.A) (BRK.B) shares once again set several all-time highs.
Class A shares closed Monday at $821,931, a record closing high, and finished the week at $815,600 for a gain of just 0.3%. The stock briefly climbed to around $822,929 on Friday's open but failed to surpass the intraday high of $824,765 set the previous Thursday. After Buffett announced last year that he would step down as CEO, Berkshire suffered a pullback of as much as 15%, and that decline has now been fully recovered. The more liquid Class B shares also posted a record close on Monday at $548.56. They rose to $550.47 on Friday, an all-time intraday high that slightly exceeded Thursday's $549.96. Still, Class B shares gained less than 0.1% for the week.
Although upward momentum weakened somewhat during the week, Berkshire's shares posted an impressive gain for October as a whole, significantly outperforming the S&P 500 and the Nasdaq Composite. The Nasdaq tumbled 2.9% on Friday, its biggest one-day drop since June, as investors worried about excessive spending on AI and pulled money out of AI technology stocks that had previously surged. The rotation into traditional value sectors benefited Berkshire. Berkshire rose 8.9% in October, while the S&P 500 fell 0.9% and the Nasdaq dropped 5.3% over the same period. The year-to-date performance gap between Class B shares and the S&P 500 narrowed from a 3.5 percentage point lag last week to 2.8 percentage points this week. Based on the "Berkshire stock watch" chart, Berkshire has outperformed the S&P 500 by more than two percentage points over the past 12 calendar months.
AI sector panic: the market value of Berkshire's stake in Google parent Alphabet shrinks by tens of billions
While Berkshire benefited from money fleeing the AI sector, one of its major holdings was hit hard. Google parent Alphabet (GOOGL) shed about $500 billion in market value on Thursday as its shares plunged nearly 13%, the worst single-day performance since its 2004 listing. The third-quarter report released Wednesday evening showed negative free cash flow of $9.1 billion, far exceeding analysts' expectations of $2.7 billion, fueling concerns about the massive capital expenditure pressure from AI infrastructure buildout. At the same time, search engine revenue missed expectations for a second consecutive quarter. Buffett established the Alphabet position last year and added to it in the second quarter of this year through a $10 billion private placement. Berkshire's Alphabet stake was once worth $40 billion at the third-quarter high in early August. Since that peak, the position's value has shrunk by a quarter, falling to $29.6 billion on Friday, making it Berkshire's fourth-largest stock holding.
Coca-Cola's stake steadily rises to third-largest holding: up nearly 16% from late-July low of $32.5 billion, now worth $37.6 billion
Based on estimates, Berkshire's cost for buying Alphabet was most likely above $300 per share, perhaps even close to $320 per share, and the investment is currently underwater.
DaVita stake trimmed again to keep ownership percentage unchanged
A filing disclosed by the SEC last week showed that Berkshire sold $69 million of DaVita stock on Tuesday. Berkshire now holds 28.3 million shares of the dialysis services provider, worth $5.3 billion. The sale does not mean Berkshire has turned bearish on the company. It is another quarterly reduction following a 2024 agreement between Berkshire and DaVita that caps Berkshire's ownership at no more than 45%. As DaVita continues to buy back and cancel shares, Berkshire must sell in tandem to keep its ownership percentage at the cap. DaVita is up 65% year to date; in August it fell more than 23% in a single week after disappointing earnings, and Berkshire promptly carried out another round of selling under the agreement.
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