Buffet rackets up substantial earnings and chastises the American administration
Title: Berkshire Hathaway's 2024 Profit Spike and Share Repurchases: An In-depth Analysis
Warren Buffett's investment powerhouse, Berkshire Hathaway, has once again smashed records by reporting a staggering 27% increase in operating profit for the third year in a row. This monumental leap brought the total operating profit for 2024 to an impressive $47.44 billion. Amidst this success, the company announced that its substantial cash reserves hit an all-time high of $334.2 billion by year's end.
Diving deeper into the fourth quarter, the operating profit soared by 71% to an eye-popping $14.53 billion. The primary drivers of this surge were substantial gains in the insurance sector and currency fluctuations. Matched against these triumphs, the overall net profit for the year amounted to a substantial $89 billion, bolstered by investments in powerhouse companies such as Apple and American Express.
Berkshire Hathaway's extensive portfolio boasts a diverse range of holdings. These include the BNSF railroad, industrial and chemical companies, real estate giant HDR, retail giants like Dairy Queen and See's Candies, and Fruit of the Loom underwear.
Coming to Berkshire's share repurchases, the company displayed a more conservative approach in 2024. The last quarter saw no share repurchases, and throughout the entire year, only $2.9 billion worth of repurchases were made. This reticence mirrors the strength of Berkshire's stock performance in 2024, which skyrocketed by over 25%.
Buffet's shareholder letter was a poignant reminder that while capitalism has its merits, it also has inherent flaws that must be addressed. He criticized the misconduct of certain individuals, urged governmental support for those in need, and highlighted the importance of maintaining a stable currency.
In terms of performance, Berkshire outperformed the S&P 500 in 2024 despite a lower amount of share repurchases. This was primarily due to operational strength and strategic investments. However, the lack of share repurchases in Q4 and a decrease in net earnings could potentially impact investor perceptions.
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- Berkshire Hathaway's operating earnings growth of 27% was primarily driven by strong performance in its insurance businesses, specifically GEICO, and higher investment income due to rising interest rates. However, net earnings attributable to shareholders decreased by 7.5% to $89 billion due to lower investment gains compared to 2023.
- Berkshire Hathaway has been actively repurchasing shares since 2018, with a total of approximately $75 billion in repurchases over five years. Despite this strong performance, the company did not engage in any share repurchases in Q4 2024, focusing instead on maintaining high cash reserves.
- Berkshire Hathaway's stock performance historically outperformed the S&P 500. However, in recent years, the outperformance has been less significant. Berkshire's operational strength, strong investment strategy, and strategic investments suggest a robust performance. However, the lack of share repurchases in Q4 and the decrease in net earnings might influence investor perceptions differently compared to the broader market.
Despite Berkshire Hathaway'srecord-breaking 27% increase in operating profit for 2024, reaching a total of $47.44 billion, the company decided to maintain a more conservative approach with share repurchases, only allocating $2.9 billion throughout the year. Despite this, Berkshire outperformed the S&P 500 in 2024, with its strong operational strength and strategic investments being the primary drivers, despite a decrease in net earnings in Q4. Despite the substantial profit fluctuations, Berkshire Hathaway's diverse portfolio, including GEICO and BNSF railroad, continued to drive its growth in 2024.
