Berkshire Gets a Lift From Trump’s Win

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Berkshire Gets a Lift From Trump's Win -- WSJ insurance

Investing in the shares, which are up 8% since the election, is seen as a bet on U.S. growth

Warren Buffett was one of Donald Trump’s biggest critics during the final months of the presidential campaign. Now
he is one of the biggest beneficiaries of a Trump-influenced market rally boosting the value of everything from banks to
railroads.

Berkshire, which owns traditional businesses such as insurers, railroads, utilities and manufacturers, stands in
the echelon of tech giants. It is the fourth-biggest U.S. company by market capitalization, according to FactSet, below
Apple Inc., Alphabet Inc. and Microsoft Corp. Mr. Buffett, Berkshire’s chairman and biggest shareholder, is the world’s
third-richest man, according to Forbes.

U.S. stocks have risen since the presidential election on the expectation that Mr. Trump’s administration and
Republican leadership in Congress will roll back taxes and regulations. The S&P 500 has gained 3% to 2204.71 from Nov. 8
through Monday.

In that period, Berkshire Class A and Class B shares have both risen about 8%. Both classes of shares rose Monday,
with A shares up 0.4% to $240,000 and Class B up 0.5% to $160.21.

Mr. Buffett, a Democrat, campaigned for Hillary Clinton and criticized Mr. Trump during the campaign. After Mr.
Trump alleged at a presidential debate that Mr. Buffett had taken a "massive" deduction on his taxes, Mr. Buffett
publicly released his personal tax information and challenged the Republican candidate to do the same.

Mr. Buffett didn’t respond to a request for comment. In April, he told shareholders that Berkshire would "continue
to do fine" no matter which candidate was elected president. Following the election, Mr. Buffett told CNN that his
investing decisions had been unaffected by the election and that Mr. Trump "deserves everybody’s respect."

"The stock market will be higher 10, 20, 30 years from now," Mr. Buffett said in a CNN interview aired Nov. 11. "It
would have been with Hillary, and it will be with Trump."

Helping drive Berkshire’s stock higher is a broad exposure to the financial industry through its ownership of
insurance companies and banks. Notably, J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. are two of the best
performers in the Dow Jones Industrial Average since the election.

Berkshire’s investment portfolio owns large stakes in financial companies including Wells Fargo & Co. and American
Express Co., and the company recently bought shares in four major U.S. airlines. Wells Fargo stock slid this fall due to
its sales-practices scandal but has risen alongside other banks since the election.

Financial firms across the market have benefited from a belief that a Trump administration will help fuel a shift
to higher interest rates, as well as push for less onerous regulation of the industry, according to analysts.

An investment in Berkshire is also a bet on U.S. growth, given the firm’s broad diversification. Berkshire sells
electricity, furniture, cars, newspapers and other goods through its subsidiary companies. Its BNSF Railway Co. is one
of the biggest in the U.S.

"There is this sense that after this surprise election, under President Trump there will be more rapid growth than
there would have been otherwise," said Meyer Shields, managing director at Keefe, Bruyette & Woods. "Berkshire is
represented in all elements of the economy."

Mr. Buffett built Berkshire Hathaway, originally a New England textiles company, into a powerhouse over five
decades through long-term stock investments and dozens of acquisitions. One of the company’s enduring advantages has
been its ability to profitably invest "float," the cash given to the company as insurance premiums that doesn’t have to
be paid out until years later. Berkshire’s insurance float stood at $91 billion at the end of the third quarter,
according to the company.

Since Mr. Buffett acquired Berkshire in 1965, its per-share market value has posted a compounded annual gain of 21%
through 2015. Class A shares are up more than 21% this year.

Some investors may be buying Berkshire shares postelection as a defensive bet because Mr. Buffett’s value-oriented
investment strategy can outperform during market routs, said Paul Lountzis, president of Lountzis Asset Management LLC,
which owns Berkshire shares.

"It’s a safe place to put your money. [Berkshire has] a broad diverse set of revenues," Mr. Lountzis said. "If we
would go into a very difficult time on the equities side, Berkshire has proven repeatedly that they are a Fort Knox."

Write to Nicole Friedman at nicole.friedman@wsj.com