By Jonathan Stamp
(Reuters) -Warren Buffett’s Berkshire Hathaway said on Saturday that the operational profit set a record in the fourth quarter and for the third consecutive calendar year, reinforced by improved insurance and higher investment income in its insurance companies.
Much of that income came from Berkshire’s huge cash interests, which ended 2024 with a record of $ 334.2 billion, twice as much as a year earlier.
In his annual letter to the shareholders of Berkshire, the 94-year-old Buffett ensured that Berkshire would rather invest in companies to keep cash.
But he also said that his Omaha, the Nebraska -based conglomerate “did better than I expected”, although 53% of his 189 operational companies achieved lower income.
He attributed the improvement in part to higher yields from American Treasury accounts and improvement at the Geico car insurer, who benefited from improved prices and tighter insurance characteristics as the loss figures of accidents fell.
“Those were incredible figures,” said Thomas Russo, a partner at Gardner Russo & Quinn in Lancaster, Pennsylvania, who has had Berkshire shares since the 1980s. “You really saw the power of the insurance activities and investments of Berkshire.”
Buffett has broadcast Todd Combs, the Chief Executive of Geico, since 2020 and also a Berkshire investment manager and said that he “reformed Geico in an important way” by increasing efficiency and improving the insurance, although more work remains.
Geico cut more than 2,300 jobs last year and paid around 10,000 jobs-26% of his workforce-along the end of 2022.
No back purchase
The business profit rose by 71% to $ 14.53 billion in the fourth quarter and 27% to $ 47.44 billion in 2024.
The quarterly net result was $ 19.69 billion, or $ 13,695 per average equivalent share, because the value of Berkshire’s interests in Apple, American Express and other shares increased. For the year, the net result was $ 89 billion.
Buffett considers net results misleading because they include profit and losses in investments that Berkshire has not sold and sometimes has no plan to sell.
The increased cash interest in 2024 was largely of $ 143.4 billion in stock sales, including 62% of Berkshire’s interests in Apple and a third of their interest in Bank of America.
Berkshire has been a net seller of shares for nine consecutive quarters.
In the meantime, Berkshire has only spent $ 2.9 billion to buy back his own shares in 2024. Until 10 February it has not carried out back purchase since last May.
Bill Smead, an old Berkshire investor at Smead Capital Management in Phoenix, noticed Buffett’s remark in the annual letter that Berkshire is only “very rarely” knee-deep in things to buy.
