RH Gets Boost from Berkshire

Shares of RH (NYSE: RH) surged Friday, a day after Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) revealed it owned 1.2 million shares of the furniture retailer at the end of the third quarter.

Berkshire announced the stake in a filing with the Securities and Exchange Commission.

The stock of RH, formerly known as Restoration Hardware, has rallied more than 40% already this year. Shares rocketed $8.81, or 5%, to $184.03 in Friday’s first hour.

Berkshire’s new stake in RH is worth $206.3 million as of Sept. 30, making it the fourth biggest stakeholder in RH, according to FactSet. For Berkshire, it’s a relatively small holding.

Corte Madera, California-based RH has transformed itself into a high-end luxury brand and has crushed earnings expectations this year as the brand’s turnaround begins to pay off. The company changed its name to RH two years ago to rebrand itself as a "lifestyle" company.

RH has opened about 70 so-called RH Galleries, expansive museum-style stores, and has adopted a membership model.

Berkshire’s filing documents the company’s holdings as of end of September. Some of the new investing decisions, including RH, could be the work of Buffett’s investing proteges Todd Combs and Ted Weschler, who manage their own stock portfolios at Berkshire.

The filing showed Berkshire decreased its stake in Wells Fargo (NYSE: WFC) by 7.7% to about 378 million shares. Berkshire also trimmed its Phillips 66 (NYSE: PSX) stake by 6.7% to 5.2 million shares worth around $530 million, according to the filing.

Berkshire shares hiked $50.01 to $329,352.01 Friday morning.