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Why Berkshire Hathaway Stock Climbed 13.6% in November

By Keith Noonan - Dec 8, 2020 at 8:53AM

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Warren Buffett's company beat the market and revealed some eye-catching moves last month.

What happened

Berkshire Hathaway's ( BRK.A 0.80% )( BRK.B 1.05% ) Class A shares rose 13.6% in November, according to data from S&P Global Market Intelligence. Class B shares climbed 13.4% in the month. The Warren Buffet-led company's stock enjoyed double-digit gains thanks in large part to a record-setting rally for the broader market.

^SPX Chart

^SPX data by YCharts.

The S&P 500 index climbed 10.75% last month, its best-ever November performance. Berkshire Hathaway is an investment holding company that owns a large portfolio of stocks, and the broader market's impressive rally drove double-digit gains for the Class A and B shares last month. 

Warren Buffett.

Image source: The Motley Fool.

So what

Berkshire Hathaway's valuation often sees moves in conjunction with the broader market, and last month's rally helped the Class A and B shares set record highs. The company also published its third-quarter earnings results and 13-F filing last month, providing a detailed look at the investment giant's recent performance and what it has been buying and selling.

Berkshire repurchased $9 billion worth of its own shares in the third quarter, a record for the company. Last quarter's repurchasing splurge pushed the company's spending on stock buybacks to $15.7 billion across the first nine months of the year. 

Other notable purchases in the quarter included $2 billion in Bank of America stock and a $10 billion deal (including debt) to purchase Dominion's natural gas assets. The company also bought 6.1 million shares of Snowflake, a cloud data warehousing specialist that had its initial public offering (IPO) in mid-September. Berkshire trimmed its position in Apple by 36.3 million shares, although the tech giant remains the conglomerate's largest stock holding and still accounts for nearly half of its portfolio. 

Now what

Berkshire Hathaway stock has traded roughly flat across December's trading despite continued momentum for the broader market. 

^SPX Chart

^SPX data by YCharts.

The company's massive stock buyback initiative should create an earnings catalyst, as shares that have been bought back will be retired, thereby reducing the total outstanding share count. The buyback push also suggests that Buffett, vice chairman Charlie Munger, and other top managers believed that Berkshire was undervalued and that they have a bullish outlook for the company and the broader market.  

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$429,625.00 (0.80%) $3,425.00
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
$284.35 (1.05%) $2.96
Bank of America Corporation Stock Quote
Bank of America Corporation
$44.66 (1.14%) $0.51
Apple Inc. Stock Quote
Apple Inc.
$170.22 (2.96%) $4.90
Dominion Resources, Inc. Stock Quote
Dominion Resources, Inc.
$75.49 (1.62%) $1.20
Snowflake Inc. Stock Quote
Snowflake Inc.
$363.00 (6.25%) $21.34

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

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