Wall Street stocks had an eventful April as the fear and greed index plummeted to the extreme fear zone amid Donald Trump’s tariff announcements. The S&P 500 index formed its first death cross in over two years. However, the Berkshire Hathaway stock price did well, and is now hovering near its all-time high.
Berkshire’s performance has helped Warren Buffett grow his fortune at a time when most billionaires have suffered significant losses. Elon Musk has a net worth of $310 billion, $122 billion lower than where he started the year at.
Jeff Bezos has lost $36 billion this year, while Mark Zuckerberg, Bill Gates, Bernard Arnault, Larry Ellison, Sergey Brin, and Larry Page have shed over $120 billion in value.
Warren Buffett, on the other hand, has added over $22.4 billion to his fortune, and is now worth $164 billion. This performance happened for two main reasons: his huge cash position and the fact that most of the portfolio companies are not affected by tariffs.
Berkshire Hathaway stock is supported by cash
The primary reason the BRK stock price has performed well this year is that Warren Buffett has largely shifted to cash over the past few months.
He has sold large positions on companies like Apple and Bank of America, a process that has led to his cash balance being worth over $334 billion. He has doubled that amount since the company had about $164 billion at the end of 2023.
Having a large cash balance benefits Berkshire Hathaway stock in three main ways. First, the cash, unlike stocks, don’t decline when the market is crashing, which helps to provide stability to the firm.
Second, the large cash hoard means that the company is making free money. That’s because Buffett invests his cash hoard in government bonds, which are now yielding about 4%. As such, its interest income could be worth over $13 billion.
The company generated an interest income of $13.7 billion last year, significantly higher than its interest expense of $4.9 billion. This means that it made $8.8 billion in interest income.
Furthermore, the cash balance enables the company to make significant acquisitions, particularly now that American stocks have declined. Buffett has a long history of making such acquisitions. For eaxample, Buffett famously bought bank stocks like Goldman Sachs, Bank of America, and Wells Fargo during the last crisis.
BRK stocks not exposed greatly to tariffs
The Berkshire Hathaway stock price has done well because most of the companies in the fund are not exposed to Donald Trump’s tariffs directly.
Trump has exempted Apple from tariffs because the surge in iPhone prices would be seen by customers. American Express, Bank of America, Coca-Cola, Moody’s, Chevron, and Occidental are not affected directly.
The same is true with other companies like VeriSign, T-Mobile, Visa, Mastercard, Aon, and Capital One Financial. In other words, Buffett has created an all-weather portfolio that is hard to disrupt.
Berkshire Hathaway stock price analysis
The daily chart shows that the BRK stock price has done well in the past few months. It has jumped to near $800,000, and is nearing the all-time high of $807,885. The stock has moved above the 50-day and 100-day Exponential Moving Averages (EMA).
It has remained above the Ichimoku cloud indicator. Therefore, the outlook for the stock is highly bullish. A move above the resistance level at $807,885 will point to more gains to $1 million, up by 23% above the current level. A drop below the support at $740k will invalidate the bullish view.
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