Advertise
Resources
Member, Beacon International Group, Ltd.
OMAHA, Neb.—Berkshire Hathaway Inc.'s reserve releases are “mostly unsustainable,” Meyer Shields, an analyst with Baltimore-based Stifel, Nicolaus & Co., said in a Wednesday report that reiterated his “sell” recommendation on the stock.
In the report, Mr. Shields said Berkshire Hathaway's domestic insurers released about $310.5 million of prior period reserves in the third quarter, bringing its year-to-date total to $1.8 billion, or about 14.5% of year-to-date operating income.
“Our sell rating on the shares of Berkshire Hathaway primarily reflects our contention that its earnings will disappoint investors as commercial insurance and reinsurance loss reserve releases fade, even as the economy limps towards recovery,” Mr. Shields said in the report. “We see no reason to prefer Berkshire's shares over the broader market indices and we see fair value for the shares at about $107,500, about 10% below their current level.”
Omaha, Neb.-based Berkshire reported a 45.9% increase in operating earnings for the nine-month period that ended Sept. 30, which rose to $8.08 billion. Operating earnings for the quarter totaled $2.79 billion, a 35.6% increase.
A Berkshire Hathaway spokesman could not be reached for comment.