Berkshire Hathaway Shares Rise on Record Operating Earnings

Berkshire Hathaway shares experienced an uptick following the company's impressive announcement of operating earnings. Shareholders had high hopes for news regarding the company's substantial cash reserves, but some may find the information lacking.

Class A shares of the Omaha-based conglomerate, which oversees well-known entities like Geico and BNSF Railway, rose by 1.2% in premarket trading on Monday. This increase came in response to Berkshire's earnings report released over the weekend. The report highlighted a remarkable 71% leap in operating profit, which hit $14.5 billion for the fourth quarter. A significant contributor to this surge was the performance in insurance underwriting, where profits soared by 302% compared to the previous year, reaching $3.4 billion.

Investment Gains Slow

Despite the boost in operating earnings, Berkshire's investment returns from its portfolio holdings saw a considerable decline in the fourth quarter. Gains dropped to $5.2 billion, a sharp decline from $29.1 billion the year before. Additionally, Berkshire has been more of a seller than a buyer in the stock market, offloading equities for the ninth consecutive quarter, with a total of over $134 billion in sales for 2024 alone. The company's largest equity holdings, particularly in Apple and Bank of America, have also been reduced significantly.

Record Cash Reserves

As a result of this active selling, Berkshire's cash reserves have ballooned to a new record of $334.2 billion, up from $325.2 billion at the end of the previous quarter. Warren Buffett, Berkshire's influential leader, stated in his annual letter that the accumulation of cash does not signify a decrease in his enthusiasm for purchasing stocks or businesses. He assured shareholders that the majority of their investments remain in equities.

Buffett pointed to high stock valuations as a reason for his hesitance in making new purchases during the current bull market, citing that he often finds nothing particularly appealing. He did express confidence in his successor, Greg Abek, encouraging shareholders that Abek could identify valuable equity opportunities and even likening his capabilities to those of the late Charlie Munger.

Current Market Activity

In a notable observation, Berkshire has halted its share buyback program, having repurchased no shares in the fourth quarter and maintaining that stance through early February. This has led to some impatience among investors and analysts, who anticipate further justification for this inactivity. Conversely, others trust Buffett's conservative approach, believing that it positions Berkshire to capitalize on larger opportunities during future economic downturns.

Overall, Berkshire Hathaway has had a stellar year, showcasing a 25.5% rally in 2024, outperforming the S&P 500 and marking its strongest performance since 2021. The stock continues to climb, having risen more than 5% in 2025 so far.

Berkshire, Earnings, Cash