Warren Buffett’s Berkshire Hathaway See Profits Increase 23%

Berkshire Hathaway Inc.’s fourth quarter profits increased on the back of the stock market boom.

Berkshire’s net profit rose to $ 35.8 billion, or $ 23,015 the equivalent of a Class A share, up nearly 23% from the $ 29.2 billion profit of the previous year, or $ 17,909 per share.

Operating profit, which excludes some investment results, was $ 5 billion, up from $ 4.4 billion the previous year. Billionaire investor Warren Buffett said operating income better reflects Berkshire’s performance than net income which incorporates unrealized investment gains or losses.

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Berkshire operates a large insurance operation as well as railroads, utilities, industrial manufacturers, retailers and even car dealerships. It also holds large investments, particularly on the stock market.

A change in accounting rule in recent years has meant that Berkshire’s earnings often reflect the broader performance of the stock market.

Mr. Buffett, 90, built his sprawling Omaha, Neb. Conglomerate as a vehicle for investors interested in long-term gains. As such, Berkshire operates a variety of different businesses that Mr. Buffett says will stand the test of time. The company also invests the “float” of the premiums paid by its insurance clients.

Fourth quarter earnings at Berkshire Hathaway Inc. increased on the strength of the stock market. (AP Photo / Nati Harnik)

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Berkshire’s available cash and short-term treasury bills stood at $ 138.3 billion in the fourth quarter. Investors watched to see if Mr. Buffett would buy a large stake in a large company like he did in other times of turmoil in the US economy.

Despite rising earnings, Berkshire’s stock performance remained below the overall market for a second year in a row. The S&P 500 Index rose 16.3% for the year ended Dec. 31 while Berkshire shares rose 2.4%. Berkshire stock also lagged behind the index in 2019.