Shares of Berkshire Hathaway nearly registered their worst day this year Tuesday, a loss almost certainly not connected to Monday’s bizarre issue that caused the New York Stock Exchange to show Berkshire shares down almost 100%, but still coming as a steep selloff that even confounded Wall Street analysts.
Key Takeaways
- Berkshire Hathaway’s Class A shares fell more than 2% to below $620,000 by mid-afternoon, pacing toward their largest daily loss since February, while its cheaper “baby Berkshire” Class B shares sank more than% to just below $410.
- The selloff came as a “surprise” as it did not have a clear catalyst, Argus Research analyst Kevin Heal explained to Forbes, adding he doubted it had “anything to do” with the glitch.
- Heal noted that the losses for Berkshire came amid smaller stock declines for several of its largest investments in public companies—shares of Bank of America, Chevron, Chubb and Occidental Petroleum each fell 0.5% or more—adding it’s likely the selloff was due to some benign profit taking from investors who cashed in following Berkshire’s nice run (the stock is up 15% year-to-date, slightly outpacing the S&P 500’s 11% gain).
- Keefe, Bruyette & Woods analyst Meyer Shields pointed to the “double whammy” pressuring Berkshire shares due to the accompanying shaky investor sentiment and expectations for stubbornly high interest rates, which drain not just the value of its nearly $400 billion worth of stock holdings but also the earnings potential in its own businesses, especially in its interest rate-sensitive insurance in its core insurance and energy subsidiaries, as a possible explanation for the Tuesday losses.
- “So much uncertainty about short-term rates [is] messing with day-to-day stock movements” for publicly traded asset managers like Berkshire, according to Morningstar analyst Greggory Warren.
www.forbes.com.au/news/investing/berkshire-hathaway-stock-suffers-worst-loss-in-4-months/
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