I am quoted in a Kiplinger’s article: “6 Stocks That Stand To Gain From Higher Interest Rates” (March 29, 2017).
Share price: $174.98
Market cap: $431.6 billion
Dividend yield: 0%
As an owner of insurance companies and an investor in big banks, Warren Buffett’s Berkshire Hathaway will profit from rising interest rates in a number of ways, says David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business who studies Buffett and is a Berkshire shareholder.
”Since Berkshire currently has about $85 billion in cash invested primarily in short-term Treasuries, a [one percentage point] increase in short-term interest rates results in an additional income of $850 million per year for Berkshire,” Kass says. “Furthermore, Wells Fargo, one of Berkshire’s largest equity investments, will benefit from an increase in earnings as interest rates rise. Their corresponding share prices should then also increase.” Berkshire owns about half a billion shares of Wells Fargo (WFC) alone.
The bottom line is that Berkshire’s businesses, which comprise 81% of its assets, and its portfolio of stocks, which account for 19%, will become increasingly valuable as rates rise, says Kass.