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Berkshire shares slip after hitting all-time high on big profit gain

Warren Buffett tours the grounds at the Berkshire Hathaway Annual Shareholders Meeting in Omaha Nebraska.

David A. Grogan | CNBC

Berkshire Hathaway shares slipped Monday, despite hitting an all-time high following strong earnings from Warren Buffett’s conglomerate over the weekend.

Berkshire’s Class A shares last fell by 2.2%. Earlier in the session, the stock reached an all-time intraday high of $647,039, according to FactSet data. The shares settled at $615,356.

Meanwhile, Class B shares declined by 1.9%. At one point, the stock hit an intraday record high of $430. It closed down at $409.14.

Berkshire on Saturday posted fourth-quarter operating earnings of $8.481 billion, about 28% higher than the $6.625 billion from the year-ago period, driven by big gains in its insurance business. Operating earnings refers to profit from businesses across insurance, railroads and utilities.

Meanwhile, Berkshire’s cash levels also swelled to records. The conglomerate held $167.6 billion in cash in the fourth quarter, surpassing the $157.2 billion record the conglomerate held in the prior quarter.

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Berkshire Hathaway Class A

But one analyst said he expects that the stock is fairly valued, saying any upside from the conglomerate’s rosy earnings outlook is already priced into the name.

“BRK shares have significantly outperformed financial services peers during 2023, supported by a relatively strong earnings outlook. We continue to expect solid earnings from BRK’s diverse group of operating companies,” Edward Jones’ James Shanahan wrote Saturday. “In our view, however, the current share price reflects these positives.”

In fact, the billionaire investor said in his annual letter also released this past weekend that he expects Berkshire will only slightly outperform the average company from here on, especially as the conglomerate reaches a net worth of 6% of the total S&P 500 companies.

‘With our present mix of businesses, Berkshire should do a bit better than the average American corporation and, more important, should also operate with materially less risk of permanent loss of capital,” Buffett said. “Anything beyond ‘slightly better,’ though, is wishful thinking.”

Buffett added that only a handful of businesses are likely to “truly move the needle” for the firm through acquisitions. The last major deal Berkshire made was in 2022, when it bought insurer and conglomerate Alleghany for $11.6 billion.

— CNBC’s Michael Bloom and Chris Hayes contributed to this report.

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