Berkshire Hathaway Falls Behind 📉

Berkshire Hathaway Falls Behind

Warren Buffett’s conglomerate investment holding company Berkshire Hathaway saw a substantial drop in the fourth quarter earnings. Compared to a year earlier, Berkshire Hathaway’s operating earnings for the fourth quarter were down 7.9%, a drop from $7.285 billion to $6.7 billion. As Berkshire Hathaway is a major conglomerate, they manage several subsidiaries ranging from insurance, rail transportation, manufacturing, energy, and much more; their operating earnings refers to the total combined earnings from each of their businesses. The single business under their portfolio that took the biggest hit was insurance-underwriting, which fell over 34% from $372 million to $244 million. During harsh economic conditions, Berkshire Hathaway has seemed to also swell their cash hoard, growing roughly $20 billion in the quarter to a total of $130 billion.

The 92 year old Buffett himself, who has been coined “the Oracle of Omaha” for his success in value investing, has recently gone under scrutiny for share repurchases. Several people and politicians have claimed in recent years that stock buybacks solely boost earnings per share, and the cash that was used in the transaction could be used for other ways to grow the business. However, in an annual letter to shareholders of Berkshire Hathaway, Buffett seemed to reiterate that the repurchases increase the intrinsic value per share, thus increasing the shareholder’s interest in the conglomerate’s businesses. Despite the posted losses and criticisms, Buffett, being the CEO for nearly 60 years, continues to bet in favor of America, claiming : “At Berkshire, there will be no finish line”.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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