Shares of Warren Buffett's Berkshire Hathaway Inc
Berkshire's Class A shares fell as much as 6.2 percent to $73,750, their lowest level since August 2003, before rebounding after the White House said it strongly believed the U.S. banking system should stay in private hands, and not be nationalized.
Much of the worry over Berkshire stems from derivative contracts that could force the company to make big payments if the Standard & Poor's 500 <.SPX> and three other stock indexes were to be lower at various times between 2019 and 2027.
Berkshire has said it could owe as much as $37.04 billion on the contracts, in the unlikely event that the indexes were to fall to zero.
Meanwhile, Berkshire revealed this week that in the fourth quarter it left intact most of its holdings in U.S. financial companies, including in Wells Fargo & Co
If we see a selloff in banks, then a selloff in Berkshire would be justified because of its exposure to finance, including through Wells Fargo, American Express and insurance, said Vahan Janjigian, author of the book Even Buffett Isn't Perfect. Investors may also be selling off when they expect derivative write-offs to be larger than expected.
On Friday, Bank of America Corp
In late afternoon trading, Berkshire's Class A shares were down $2,100, or 2.7 percent, at $76,500. They have lost close to half their value since peaking at $151,650 on December 11. Berkshire's market value at the time was about $235 billion.
While the derivative losses may only exist on paper, accounting rules require Omaha, Nebraska-based Berkshire to report them with earnings.
This could lead Berkshire to report its fifth straight quarterly decline in profit when it releases year-end results.
Carrie Kizer, an assistant to Buffett, said the results and Buffett's widely-read annual shareholder letter may be released on February 27 or 28.
(Reporting by Jonathan Stempel, editing by Gerald E. McCormick)