Berkshire shares fell after hitting record highs on big earnings gains.
Warren Buffett tours the Berkshire Hathaway annual shareholder meeting in Omaha, Nebraska.
David A. Grogan | CNBC
Berkshire Hathaway Stocks fell on Monday despite hitting record highs last weekend on the back of strong profits for the Warren Buffett-led conglomerate.
Berkshire’s Class A shares were last down 0.7%. According to FactSet data, the stock price hit an intraday high of $647,039 in early trading today. The stock last traded around $625,000.
On the other hand, Class B stock prices fell 0.7%. At one point, the stock hit an intraday high of $430. It was last traded at around $415.
Berkshire on Saturday reported fourth-quarter operating profit of $8.481 billion, up about 28% from $6.625 billion a year earlier, thanks to strong gains in its insurance business. Operating profit refers to profits generated from insurance, railroads, and public works in general.
Meanwhile, Berkshire’s cash levels also rose to record levels. The conglomerate had $167.6 billion in cash in the fourth quarter, surpassing the record $157.2 billion it held in the previous quarter.
Berkshire Hathaway Class A
But one analyst said he expects the stock to appreciate significantly, saying the upside from the conglomerate’s rosy earnings outlook is already reflected in its name.
“BRK shares have significantly outperformed peers in the financial services industry in 2023, driven by relatively strong earnings prospects,” James Shanahan of Edward Jones said on Saturday. “We continue to expect solid returns,” he wrote. “However, in our view the current share price reflects these positives.”
Investors shouldn’t expect Buffett’s candid comments to help him get to $1 trillion faster. In fact, the billionaire investor said in his annual letter released over the weekend that he expects Berkshire to perform slightly better than the average company going forward. Especially since the net worth of this conglomerate amounts to 6% of all S&P 500 companies.
“With its current business mix, Berkshire should perform slightly better than the average American company and, more importantly, should have a substantially lower risk of permanent capital loss,” Buffett said. “Anything beyond ‘slightly better’ is wishful thinking.”
Buffett added that only a few companies have the potential to make a “real difference” to a company through acquisitions. Berkshire’s last major deal was the $11.6 billion acquisition of insurance company and conglomerate Alleghany in 2022.
— CNBC’s Michael Bloom and Chris Hayes contributed to this report.
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