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Mon, Sep 02, 2024

NetJets Owner Joins Trillion Dollar Club

Berkshire Hathaway is First of its Kind to Reach This Milestone

Warren Buffett’s Berkshire Hathaway, which owns NetJets and Executive Jet Management, recently reached a market value of $1 trillion. They are the only non-tech company to have passed this milestone.

Other trillion-dollar club members include Apple, Nvidia, Microsoft, Alphabet, Amazon, and Meta.

“Occasionally, markets and/or the economy will cause stocks and bonds of some large and fundamentally good businesses to be strikingly mispriced,” stated Buffett in a report.

Berkshire Hathaway generated $364 billion in total revenue and $75 billion in investment contracts last year. In the last quarter, however, SEC filings showed decreased earnings due to extra maintenance, staff, and fuel costs.

Buffett has frequently second-guessed his choice to invest in the aviation industry, going as far as to say that “if a far-sighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”

He invested in the airlines for the first time in 1989 despite growing industry competition.

“I did not expect [industry] leaders to engage in prolonged kamikaze behavior,” he stated. “In the last two years, airline companies have acted as if they are member of a competitive tontine, which they wish to bring to its conclusion as rapidly as possible.”

Private aviation has been equally as challenging for Buffett. He purchased NetJets in 1998 for $711 million. The company was a financial “failure” for the first few decades, bringing $1.9 million in debt, but made a remarkable turnaround. Now, it is worth nearly as much as its part 121 peers.

The trillion-dollar milestone is huge for Berkshire Hathaway and its melting pot of businesses. Andrew Kligerman, TD Cowen's Berkshire analyst, said: "Berkshire has achieved this through a conglomerate structure, a model that many view as 'archaic,' as corporations have increasingly moved to specialization over the decades."

FMI: www.berkshirehathaway.com, www.netjets.com

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