ii view: Berkshire Hathaway grows profit and cash pile

Fourth-quarter results to 31 December 

• Operating earnings up 71% to $14.5 billion (£11.5 billion)
• Net earnings attributable to shareholders down 48% to $19.7 billion
• Cash held of $334.2 billion, up from $325.2 billion in Q3

ii round-up:

Warren Buffett's conglomerate Berkshire Hathaway Inc Class B (NYSE:BRK.B) outlined a jump in profit, led by gains in insurance assets and with group cash held hitting yet another record. 

Operating profit for the final quarter of 2024 climbed 71% to $14.5 billion (£11.5 billion), driven by an increase in insurance underwriting profit to $3.4 billion and up from $848 million in the final quarter of 2023. Berkshire's cash pile increased to $334.2 billion, up from $325.2 billion at the end of the third quarter. 

Shares in the S&P 500 conglomerate and investment company are up by close to 6% year-to-date. That’s ahead of a 2.2% improvement for the S&P index itself in 2025 so far. Apple Inc (NASDAQ:AAPL), a major Berkshire investment holding, is down 2% year-to-date. 

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Berkshire operates over 90 businesses including insurance operations, railway and energy companies and manufacturing businesses. 

Berkshire profits including investment gains and losses fell to $19.7 billion from $37.6 billion in the final quarter of 2023. The group’s holding of marketable equities reduced in 2024 to $272 billion from the prior year’s $354 billion, including a reduction in its Apple shareholding.

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Higher yields on US government bonds, or treasury stock helped insurance related investment income improve to $4.1 billion during the quarter from $2.7 billion a year ago.

Berkshire buybacks of its own shares totalled approximately $2.9 billion in 2024, down from around $9.2 billion in 2023.  

ii view:

Led by legendary investor and businessman Warren Buffett, Berkshire Hathaway is tracked and invested in by large and small investors alike. Run by Mr Buffett since 1965, Berkshire Hathaway shares trade on the New York Stock Exchange under the two classes of A and B shares. The originally established A shares carry considerably greater voting power.

For investors, the cash mountain and continued lack of a major acquisition will likely be frustrating some investors. Earnings for insurance underwriting can prove volatile, with the recent Californian wildfires potentially impacting profits. Costs generally for businesses remain elevated, while the eventual departure of Mr Buffett from the business could potentially dampen investor enthusiasm.

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To the upside, the group’s diversity of businesses regularly leaves gains for one division countering falls for another. The absence of any major business acquisitions likely underlines management’s patience in waiting for an appropriate value buying opportunity, while the significant reduction in share buybacks in 2024 may suggest that management believes there will be better buying opportunities.

In all, and given the legendary judgement and experience of Mr Buffett and his team in utilising cash wisely, Berkshire shares look to remain worthy of their place in many already diversified long-term focused portfolios.    

Positives: 

• Diverse portfolio of industries and businesses
• Company chairman Warren Buffett is regarded by many as a legendary investor and businessman 

Negatives:

• Subject to macro-economic and geopolitical uncertainties
• Management succession risk - Mr Buffett is in his 90’s

The average rating of stock market analysts:

Strong hold