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Why Berkshire Hathaway Stock Surged on Friday

By Joe Tenebruso - Mar 15, 2020 at 1:20PM

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Bargain hunters came out in force after President Trump's speech.

What happened

President Trump's press conference regarding plans to combat the COVID-19 coronavirus pandemic led to a sharp rebound in the stock markets on March 13. Many of the largest U.S. companies enjoyed powerful rallies in their stock prices. That included Berkshire Hathaway (BRK.A 0.08%) (BRK.B 0.16%), which saw its Class A shares jump more than 7% and its Class B shares leap nearly 12%.

So what

Financial markets in the U.S. and around the world suffered steep losses in recent weeks as COVID-19 -- the disease caused by the novel coronavirus -- spread across the world. Many stocks shed more than 20% of their value, as investors grew increasingly concerned that the COVID-19 pandemic would drive the U.S. and many international economies into recessions.

President Trump's press conference seemed to give investors hope that the U.S. would step up measures to slow the spread of the disease, and in the process, reduce the severity of its economic ramifications. That led investors to go bargain hunting -- and many apparently jumped at the chance to buy Berkshire Hathaway's shares at a sizable discount.

A person pushing a keyboard button labeled buy.

Image source: Getty Images.

Now what

Berkshire CEO Warren Buffett no doubt used the recent market downturn to deploy some of the company's massive cash reserves. Buffett excels at investing in competitively advantaged businesses when their prices are temporarily marked down, which happens most often during periods of market distress.

So it's likely that Berkshire will emerge from this recent downturn even stronger, and investors are wise to have used the sell-off as an opportunity to buy shares at attractive prices.

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Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$412,501.00 (0.08%) $330.99
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$274.29 (0.16%) $0.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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