The stock market was broadly higher on Monday on encouraging developments in the COVID-19 vaccine race, but Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) was an outperformer. Shortly after the market opened, the S&P 500 was up by about 4% while Berkshire was doing even better -- higher by more than 6% for the day.
Berkshire Hathaway is moving higher today for three main reasons:
First, today's positive COVID-19 vaccine data from Pfizer's late-stage trial is sending the entire market higher, particularly when it comes to value stocks. Not only does that help Berkshire itself, but keep in mind that Berkshire owns a $240 billion stock portfolio that includes a lot of names in beaten-down industries like banking.
Second, while many of Berkshire's operating businesses do well no matter what the economy is doing, some are more dependent on consumers getting out and spending money. Berkshire owns Dairy Queen, Nebraska Furniture Mart, See's Candies, and other businesses that should benefit when the economy returns to normal.
Finally, while it's completely been overshadowed by the vaccine news, Berkshire reported its latest earnings over the weekend, surprising investors by revealing that it repurchased an all-time high of $9.3 billion in stock.
Berkshire can only buy back stock when both Warren Buffett and vice chair Charlie Munger agree it's cheap. And even after today's rally, Berkshire isn't trading for much more than where it was in September, when Berkshire was doing its most aggressive buybacks. So, if Buffett and Munger are right and the stock was cheap then, there could be even more upside potential if Pfizer's vaccine is able to help the economy get back to normal.