Berkshire Hathaway, the conglomerate led by Warren Buffett, reported a significant 71% surge in fourth-quarter operating earnings, reaching $14.527 billion. The company’s insurance segment played a major role in this growth, with insurance underwriting increasing by 302% to $3.409 billion and insurance investment income rising nearly 50% to $4.088 billion. For the full year, operating earnings grew by 27%, totaling $47.437 billion.
Despite the impressive earnings, Buffett acknowledged that 53% of Berkshire’s 189 operating businesses experienced a decline in earnings. However, the company benefited from a substantial gain in investment income due to improved Treasury Bill yields and increased holdings of these short-term securities. GEICO, Berkshire’s insurance business, also contributed to the earnings growth.
Berkshire warned of an expected pre-tax loss of approximately $1.3 billion for its insurance business due to the recent wildfires in Southern California. The company is assessing the damages caused by these natural disasters and their potential impact on its financial stability and operations. By the end of 2024, Berkshire Hathaway’s cash holdings reached a record $334.2 billion, up from $325.2 billion at the end of the third quarter.
In his annual letter to shareholders, Buffett addressed the significant cash reserves, emphasizing the company’s preference for equities despite the high cash position.
Berkshire Hathaway earnings breakdown
While the value of Berkshire’s marketable equity portfolio decreased from $354 billion to $272 billion over the year, the value of its non-quoted controlled equities saw a slight increase.
Investment gains slowed in the fourth quarter, registering $5.167 billion compared to $29.093 billion in the same period the previous year. Berkshire also reduced its stock investments, including a notable reduction in its stake in Apple throughout 2024. The company emphasizes that the variability of investment gains and losses in any given quarter can be misleading to those unfamiliar with accounting rules.
Berkshire’s total earnings for the fourth quarter were $19.694 billion, a 47% decrease from $37.574 billion a year earlier. For the full year, the company’s net earnings were $88.995 billion, down 7.5% from $96.223 billion in 2023. Following the earnings report, Berkshire Hathaway shares set a new record high on Monday, breaking out above the top trendline of an ascending triangle.
This breakout, accompanied by high trading volume, suggests potential for further buying. Analysts forecast upside targets of $555 and $560 based on measured move and bars pattern analysis, respectively. Investors are advised to monitor the key support level around $485, which could act as a future support area during pullbacks.
