'Built to last' Berkshire Hathaway nears $1 trillion valuation after record profit

Warren Buffett-led Berkshire Hathaway inched closer to a $1 trillion market value on Monday, a milestone that would put it among a rarefied list of American businesses, after it posted its second straight record annual profit.

The 93-year-old investing legend assured shareholders that the investment conglomerate, currently the biggest financial firm by market capitalisation, was 'built to last'.

Berkshire's Class B shares, which carry higher voting rights and whose value was 1/1,500th of Class A shares, gained 2 per cent before the bell and were last trading at $425.61.

In his annual letter to shareholders, Buffett, however, toned down expectations for share price, saying it did not have many lucrative investment opportunities left.

Buffett told investors that Berkshire would perform slightly better than the "average American corporation", but anything beyond that is "wishful thinking", even as it had a cash pile of $167.6 billion.

Investors closely watch Berkshire as its results are often seen as a bellwether for the US economy.

"There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others... All in all, we have no possibility of eye-popping performance," Buffett wrote.

Berkshire's annual operating profit climbed 21 per cent to $37.4 billion on improved underwriting and higher investment income from the insurance segment. Operating profit for the fourth quarter also came in ahead of analysts' expectations.

"While this reads as if Buffett is saying that global equities are fairly valued, the truth is more nuanced than that," Nicholas Colas, Co-Founder of DataTrek Research, wrote in a note.

"Berkshire is a huge business and needs to take substantial positions in large companies in order to 'move the needle'. Markets are generally good at pricing those sorts of stocks, hence the lack of opportunities."

Buffett also mourned the passing of his longtime second-in-command Charlie Munger in his annual letter, while assuring investors that vice Chairman and designated successor Greg Abel was "ready to be CEO of Berkshire tomorrow."