Berkshire Hathaway Nears $1 Trillion Valuation Amid Record Profits, Buffett Tempers Expectations

Warren Buffett-led Berkshire Hathaway neared a $1 trillion market value on Monday after reporting its second consecutive record annual profit, positioning it among a select group of American companies. The 93-year-old Buffett reassured shareholders that the investment conglomerate, now the largest financial firm by market capitalization, was “built to last.”

Berkshire’s Class A shares rose 1.4%, while Class B shares, which carry higher voting rights and are valued at 1/1,500th of Class A shares, increased by 1.3%. The conglomerate recently had a market cap exceeding $915 billion.

In his annual letter to shareholders, Buffett tempered expectations for share price growth, citing a lack of lucrative investment opportunities. He suggested Berkshire would outperform the “average American corporation” but cautioned against expecting extraordinary results, despite a substantial cash reserve of $167.6 billion. “There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” Buffett wrote, adding, “All in all, we have no possibility of eye-popping performance.”

Investors often view Berkshire’s performance as an economic indicator. Nicholas Colas, co-founder of DataTrek Research, noted that while Buffett’s remarks might imply that global equities are fairly valued, the reality is more complex. “Berkshire is a huge business and needs to take substantial positions in large companies to ‘move the needle’. Markets are generally good at pricing those sorts of stocks, hence the lack of opportunities,” Colas explained.

Buffett also mourned the passing of his longtime deputy, Charlie Munger, while affirming that Vice Chairman and designated successor Greg Abel was “ready to be CEO of Berkshire tomorrow.”

Berkshire’s annual operating profit surged 21% to $37.4 billion, driven by improved underwriting and higher investment income from its insurance segment. The fourth-quarter operating profit also exceeded analysts’ expectations.

Separately, Berkshire disclosed that the U.S. government threatened to sue its PacifiCorp unit for allegedly failing to cover $356 million in costs related to the 2020 Slater wildfire in southern Oregon and northern California.

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