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© Reuters. FILE PHOTO: Berkshire Hathaway Chairman Warren Buffett walks via the exhibit corridor as shareholders collect to listen to from the billionaire investor at Berkshire Hathaway Inc’s annual shareholder assembly in Omaha, Nebraska, U.S., Might 4, 2019. REUTERS/Scott
By Jonathan Stempel
(Reuters) – Warren Buffett’s Berkshire Hathaway (NYSE:) on Saturday posted its second straight document annual working revenue, with its insurance coverage enterprise benefiting from improved underwriting and better revenue from investments as rates of interest rose.
Internet revenue additionally reached a document $96.2 billion, because the rising inventory market boosted the worth of Berkshire’s $354 billion fairness portfolio, half of which is in Apple (NASDAQ:).
In his annual letter to Berkshire shareholders, Buffett mentioned Berkshire’s insurance coverage companies carried out “exceptionally effectively” – amongst them, Geico, the place higher underwriting high quality helped it greater than reverse year-earlier losses.
This helped offset declining fourth-quarter and full-year revenue on the BNSF railroad, the place rising wages and prices for repairs elevated as income fell, and Berkshire Hathaway Power, beset by wildfire litigation and a harder regulatory local weather.
Buffett however assured buyers that his roughly $903 billion conglomerate’s “excessive fiscal conservatism” – together with a now-record $167.6 billion money stake – would serve them effectively.
Working revenue rose 28% to $8.48 billion, or about $5,884 per Class A share, within the fourth quarter, topping the typical analyst forecast for $5,471 per share in line with LSEG IBES.
For the yr, working revenue rose 21% to $37.4 billion.
“Outcomes mirror the worth of holding a diversified assortment of working companies,” mentioned Edward Jones analyst Jim Shanahan.
He mentioned Geico benefited from a willingness to cede market share by writing fewer dangerous insurance policies, whereas additionally reducing promoting bills.
The money stake helped Berkshire’s insurance coverage companies, which have $169 billion of so-called “float,” generate 38% extra funding revenue within the quarter, because the Federal Reserve boosted short-term rates of interest to curb inflation.
Outcomes additionally included a few of Occidental Petroleum (NYSE:)’s earnings, from Berkshire’s roughly 28% stake within the oil firm.
Buffett mentioned Berkshire plans to maintain its stake indefinitely however has “no curiosity” in shopping for all of Occidental. Berkshire can be an enormous investor in oil firm Chevron (NYSE:).
“He’s retaining a portfolio that’s massively defensive and incomes curiosity, and is shopping for oil shares,” mentioned Invoice Smead, a longtime Berkshire investor who runs Smead Capital Administration in Phoenix.
‘COSTLY MISTAKE’
Fourth-quarter web revenue greater than doubled to $37.57 billion, or $26,043 per Class A share, whereas the $96.2 billion annual revenue topped the outdated document $89.9 billion from 2021.
Buffett considers web outcomes deceptive as a result of they embrace positive factors and losses on investments that Berkshire has not offered.
Berkshire additionally spent about $2.2 billion within the fourth quarter repurchasing its personal inventory, and roughly $600 million extra within the first six weeks of 2024.
However the money stake grew partially as a result of Berkshire was a web vendor of shares, promoting $24.2 billion greater than it purchased in 2023.
It has been quietly constructing a number of holdings after acquiring U.S. Securities and Alternate Fee approval for confidentiality in order that different buyers is not going to copy Buffett whereas he’s shopping for.
Some analysts have mentioned these holdings may come from the financial institution, insurance coverage and finance sector, the place Berkshire invested about $3.6 billion in final yr’s second half.
Buffett mentioned BNSF’s margins have fallen behind these at its 5 main rivals since Berkshire purchased the railroad in 2010, however that “a century from now, BNSF will proceed to be a significant asset of the nation and of Berkshire. You may rely on that.”
He additionally acknowledged making a “pricey mistake” in not contemplating adjustments within the regulatory surroundings for utilities, together with from local weather change.
Buffett mentioned it could additionally take years to know Berkshire’s last invoice from wildfires in Oregon and northern California, the place it has already racked up $2.4 billion of costs.
Berkshire’s dozens of companies additionally embrace industrial components and chemical corporations, an enormous actual property brokerage, and retail manufacturers corresponding to Dairy Queen ice cream, Fruit of the Loom underwear and See’s candies.
Its inventory has outperformed the market in 2024, rising 16% in contrast with the ‘s 7% acquire, and set a document on Friday.
