Warren Buffett-led Berkshire Hathaway edged closer to achieving a remarkable $1 trillion market value on Monday, marking a significant milestone that would place it among an elite group of American corporations. This achievement followed the company’s announcement of its second consecutive record annual profit.
The 93-year-old investing icon reassured shareholders that Berkshire Hathaway, currently the largest financial firm by market capitalization, was resilient and built for long-term success.
Prior to the market opening, Berkshire’s Class B shares, which hold greater voting rights and are valued at 1/1,500th of Class A shares, rose by 2.0 percent and were last traded at $425.61.
In his annual letter to shareholders, Buffett tempered expectations regarding the company’s share price, noting a limited number of lucrative investment opportunities available. He stated that Berkshire Hathaway would likely perform slightly better than the average American corporation but cautioned against expecting extraordinary results, despite holding a substantial cash reserve of $167.6 billion.
Investors closely monitor Berkshire Hathaway’s performance as its results are often considered indicative of the broader U.S. economy.
Buffett emphasized the challenge of identifying significant investment opportunities within Berkshire Hathaway, acknowledging that only a few companies had the potential to significantly impact its performance.
Berkshire Hathaway reported a 21 percent increase in annual operating profit to $37.4 billion, attributed to improvements in underwriting and higher investment income from the insurance segment. The fourth-quarter operating profit also exceeded analysts’ expectations.
Nicholas Colas, co-founder of DataTrek Research, highlighted the nuanced perspective regarding global equity valuation, noting that Berkshire Hathaway’s size necessitates substantial investments in large companies, which are typically well-priced by the market.
Buffett paid tribute to his longtime second-in-command, Charlie Munger, in his annual letter, while expressing confidence in vice chairman and designated successor Greg Abel, affirming his readiness to assume the CEO role at Berkshire Hathaway.