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Why Berkshire Hathaway's Shares Popped 11.6% in August

By Travis Hoium – Updated Sep 8, 2020 at 8:48AM

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A big tech stock gave Warren Buffett big gains in August.

What happened 

Shares of Berkshire Hathaway (BRK.A 2.25%) (BRK.B 2.34%) jumped 11.6% in August, according to data provided by S&P Global Market Intelligence, as its biggest holding rose sharply. Berkshire Hathaway may not be a technology stock, but it does own a lot of Apple (AAPL -2.38%) stock, and that helped shares last month. 

So what 

Berkshire Hathaway owns a whopping 980.6 million shares of Apple stock, worth nearly $90 billion today. And that alone is enough to push the stock higher. Apple stock was up 21.4% in August, worth $22.3 billion.

BRK.A Chart

BRK.A data by YCharts

It didn't hurt that the S&P 500 (of which Apple is also a member) was up 7% during the month. As a large conglomerate, Berkshire Hathaway will often move with the market and last month it simply outperformed by a small amount. But it was Apple that likely drove the outsized gains

Blocks with arrows showing growth like a chart.

Image source: Getty Images.

Now what 

Today, Berkshire Hathaway's market cap is $521.5 billion, so the $22.3 billion it made in Apple last month is a sizable increase. The company doesn't often trade along with just one of its holdings, but in this case the Apple stake is so big that it makes sense for Berkshire stock to rise when Apple does. 

What I'm going to watch over the next few months is what Berkshire Hathaway does with its Apple stake. The company could just sit on it, collecting a dividend and betting shares rise. Given Warren Buffett's history of holding stocks for the long term, that's what investors should expect. But this is a big move into tech stocks for Berkshire Hathaway, so investors should expect anything at this point. 

Travis Hoium owns shares of Apple and Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$410,543.76 (2.25%) $9,053.76
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$271.69 (2.34%) $6.22
Apple Inc. Stock Quote
Apple Inc.
AAPL
$148.16 (-2.38%) $-3.60

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

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