Warren Buffett tours the grounds of Berkshire Hathaway’s annual shareholder meeting in Omaha, Nebraska.
David A. Grogan | CNBC
Berkshire Hathaway Stocks rose Monday after Warren Buffett’s conglomerate posted strong fourth-quarter earnings over the weekend.
Berkshire’s Class A and Class B shares jumped more than 1.5% each. Class A shares are up more than 17% this year, and Class B shares are up more than 18%. Berkshire was last valued at $930.1 billion, down from $905.5 billion at Friday’s close, according to FactSet.
Berkshire on Saturday reported fourth-quarter operating income of $8.481 billion, up about 28% from $6.625 billion in the same period last year, driven by strong growth in its insurance business. Operating profit refers to the profits from the insurance, railroad, and utility businesses.
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 the conglomerate had in the previous quarter.
Berkshire Hathaway, Class A
However, one analyst said he expects the shares to be fairly priced, saying any upside from the conglomerate’s rosy earnings outlook is already priced into the stock.
“BRK shares have significantly outperformed financial services peers in 2023, supported by relatively strong earnings prospects. We continue to expect solid returns from BRK’s diverse group of operating companies,” James Shanahan of Edward Jones wrote Saturday. “However, we believe the current share price reflects these positives.”
Investors also shouldn’t expect Buffett’s often outspoken comments to help the company reach $1 trillion faster. In fact, the billionaire investor said in his annual letter, also released over the weekend, that he expects Berkshire to only slightly outperform the average company from here on out, especially as the conglomerate’s net worth will reach 6% of the S&P’s total. 500.
“With our current business makeup, Berkshire should perform slightly better than the average U.S. corporation and, more importantly, should also operate with substantially less risk of permanent capital loss,” Buffett said. , is wishful thinking.”
Buffett added that few companies can “truly make a difference” for a firm through acquisitions. Berkshire’s last major deal came in 2022, when it bought insurance company and conglomerate Alleghany for $11.6 billion.
— CNBC’s Michael Bloom contributed to this report.