Buffett’s Berkshire falls below $100,000/share

Berkshire’s Class A shares fell as much as 7% to $96,050, before recovering along with the broader stock market

Shares of Warren Buffett’s Berkshire Hathaway Inc fell below $100,000 on Thursday for the first time since October 2006, after the company revealed large unrealized losses on derivative contracts tied to the stock market’s performance.

Berkshire’s Class A shares fell as much as 7% to $96,050, before recovering along with the broader stock market. Though major stock indexes ended more than 6 percent higher, Berkshire stock closed down $533, or 0.5%, at $102,800.

On Friday, Berkshire reported a 77% decline in third-quarter profit, with much of the drop attributable to falling insurance premiums and to paper losses on contracts tied to the performance of stock market indexes.

Berkshire estimated that shareholder equity fell about $9 billion in October, reflecting exposure to the derivative contracts and to other investments. It ended September with $76 billion of stock and $29.6 billion of fixed-income holdings.

Buffett has said the derivative contracts expire between 2019 and 2027, and that he expects them to be profitable. In the interim, Berkshire is able to invest the upfront premiums it received by entering into the contracts.

Omaha-based Berkshire owns some 76 companies, and is best known for its insurance holdings such as auto insurer Geico Corp and reinsurer General Re Corp.

Berkshire shares have fallen 32.2% from their record high of $151,650 set last 11 December.