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(This February 26th article has been resubmitted to correct heading syntax)
Written by Niket Nishant
(Reuters) – Shares of Warren Buffett’s Berkshire Hathaway Inc. closed more than 2% lower on Monday on investor concerns after the U.S. government threatened lawsuits against its power company PacifiCorp. As a result, the rise to a market capitalization of $1 trillion has slowed.
Berkshire disclosed the risk of a lawsuit against its division over the company’s failure to cover $356 million in costs related to the 2020 Slater Wildfire in southern Oregon and northern California.
The investment conglomerate warned Saturday that Berkshire Hathaway Energy, PacifiCorp’s parent company and one of Berkshire’s largest businesses outside insurance, is under pressure.
In his annual letter to shareholders, Buffett said: “We hope we now know the final tally of BHE’s bushfire losses so they can make wise decisions about the desirability of future investments in our vulnerable Western states. It will take many years before that happens.”
He also toned down expectations for Berkshire’s stock, saying there aren’t many lucrative investment opportunities left, while also warning investors that the largest financial company by market value is “built to last.” reassured.
The 93-year-old legendary investor told shareholders that Berkshire will likely do slightly better than the “average American company,” but that anything beyond that is “wishful thinking.” Ta. Even though the company has a cash pile of $167.6 billion.
“There are only a handful of companies left in this country that can truly change Berkshire’s course, and those companies have been picked up endlessly by us and others… Collectively, we have no There is no chance of spectacular performance,” Buffett wrote.
$1 trillion milestone
Investors are paying close attention to Berkshire because its financial results are often seen as a bellwether for the U.S. economy.
“While this sounds like Mr. Buffett saying that the world’s stocks are fairly valued, the truth is more nuanced than that,” said Nicholas Colas, co-founder of DataTrek Research. I wrote in a memo.
“Berkshire is a huge company, and to ‘move the needle’ you would need to take significant positions in large companies. The market is generally good at pricing those kinds of stocks, so there is a dearth of opportunities.” .”
Berkshire’s annual operating income increased 21% to $37.4 billion due to improved underwriting and higher investment income from its insurance division. Operating profit for the fourth quarter also exceeded analyst expectations.
A $1 trillion market capitalization would put Berkshire among a rare list of U.S. companies that currently includes giant technology companies such as Microsoft and Apple.
Berkshire’s Class A shares fell 2.16%, and its Class B shares, which have higher voting rights and are 1,500 times less valuable than Class A shares, fell 1.94%. As a result, the conglomerate’s stock market value fell below $900 billion.
“We continue to believe the stock is an attractive stock in an uncertain macro environment,” UBS analyst Brian Meredith said.
In his letter, Buffett mourned the death of his longtime second-in-command, Charlie Munger, and said his vice chairman and successor, Greg Abel, is “ready to become Berkshire’s CEO tomorrow.” assured investors.
(Reporting by Niket Nishant, Manya Saini and Jaiveer Singh Shekhwat in Bengaluru; Additional reporting by Noel Randewich in San Francisco; Editing by Arun Koyur and Pooja Desai)
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