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Berkshire shares near close above $150,000

December 12, 2007|From Bloomberg News

Berkshire Hathaway Inc. is poised to close above $150,000 a share for the first time as investors bet on Chief Executive Warren E. Buffett's ability to steer the company through turmoil in financial markets.

The Omaha-based company's Class A shares have risen 34% since Aug. 15, far exceeding the 5% advance by the Standard & Poor's 500 index.

Berkshire traded as high as $151,650 on Tuesday, a record and 100 times the next highest-priced company on the major U.S. exchanges.

Buffett may find bargain-priced securities as more than $70 billion in bank losses from bad home loans in the U.S. drive shares lower worldwide. His stock investments generated twice the return of the S&P 500 during the last three decades, according to research by Gerald Martin of American University in Washington and John Puthenpurackal of the University of Nevada, Las Vegas.

"The more chaos there is in financial markets, the better it is for Warren Buffett," said Whitney Tilson, managing partner at T2 Partners in New York and a Berkshire shareholder for 10 years. "Investors are fleeing to safety, and Berkshire Hathaway offers the ultimate in safety."

Berkshire shares lost $300 on Tuesday to close at $148,900. The stock has tripled in value over the last decade while the S&P 500 has returned 86%, including reinvested dividends. The second-highest priced stock in the U.S. after Berkshire is Seaboard Corp., which closed at $1,514.

Berkshire said Nov. 2 that third-quarter profit increased 64% on an eightfold gain from a stake in PetroChina Co., the world's biggest company by market value. Berkshire's 10 biggest investments as of Sept. 30 included Coca-Cola Co., Procter & Gamble Co. and South Korean steel maker Posco.

Investors who purchased stocks Buffett acquired would have earned an annual return of 24.6% after he disclosed his holdings in regulatory filings, sometimes four months later, Martin and Puthenpurackal found. The S&P 500 rose 12.8% a year in the same period.

Buffett, 77, is the third-richest person in the world, according to Forbes magazine.

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