By Noah Buhayar and Patricia Laya, Bloomberg
Warren Buffett became the world’s second-richest person recently after shares of Berkshire Hathaway Inc. reached a record high.
The Omaha, Nebraska-based company has soared 27 percent this year as the dozens of operating businesses the 84-year-old chairman bought over the past five decades churned out record profit.
“The all-time closing high stock price today is due to a widening appreciation of what Berkshire really is, a fortress,” Buffett biographer Andrew Kilpatrick said in an e-mail yesterday. With about $60 billion in cash at the company, “He could make a whopper of an acquisition at any moment.”
Berkshire’s Class A shares traded above $200,000 for the first time in August after a rally that followed the release of the company’s annual report, in which Buffett wrote that the company’s actual worth has been rising faster than suggested by metrics such as book value. Since that milestone, the shares have climbed another 13 percent, elevating Buffett’s fortune to $73.7 billion, $300 million more than Mexico’s Carlos Slim.
Berkshire’s performance dwarfs that of America Movil SAB , the mobile-phone company controlled by Slim, which is up 6 percent for the year. Mexico’s richest man needs to divest a large portion of America Movil assets in the country to reduce its market share below 50 percent and avoid profit-reducing penalties put in place as part of an overhaul of the nation’s telecommunications market. The new rules force America Movil to cut its fees and share infrastructure with its competitors.
Batteries, Burgers
Barring a downturn in global markets, Berkshire should finish 2014 with a flourish. It agreed last month to buy the Duracell battery business from Procter & Gamble Co. (PG) in a stock swap, and in October said it would buy Van Tuyl Group, the largest closely held U.S. auto dealer. The company also intends to provide $3 billion in financing for Burger King Worldwide Inc.’s planned takeover of Tim Hortons Inc. and earn 9 percent annual interest on the investment if the deal goes through.
Berkshire’s $26.5 billion purchase of railroad BNSF, struck during the depths of the financial crisis in 2009, is on pace to see all the cash it spent taking the company private returned by the end of this year. Buoyed by an onshore oil boom, BNSF has become a cash machine, paying more than $15 billion in dividends to Berkshire through Sept. 30, according to quarterly regulatory filings.
“Whatever you may have heard about our country’s crumbling infrastructure in no way applies to BNSF or railroads generally,” Buffett said in his 2013 annual letter to shareholders. “America’s rail system has never been in better shape, a consequence of huge investments by the industry.”
Arturo Elias Ayub, a spokesman for Slim, didn’t reply to an e-mail seeking comment. Buffett, who trails only Bill Gates as the world’s wealthiest person, didn’t respond to a request for comment sent to an assistant.
Had the investor held onto all of his Berkshire stock, which he began donating to charity in 2006, he’d have a fortune topping $110 billion.
