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Berkshire Hathaway’s Earnings Report: A Mixed Bag for Shareholders

Warren Buffett made headlines once again at the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, held on May 3, 2024. The release of the company’s quarterly earnings brought a wave of optimism among investors, although there were mixed reactions regarding its significant cash reserves.

Following the earnings announcement, shares of Berkshire Hathaway, the parent company of prominent businesses such as Geico and BNSF Railway, experienced a 1.2% increase in premarket trading on Monday. The report highlighted a remarkable 71% surge in operating earnings, which reached $14.5 billion for the fourth quarter. This impressive growth was largely attributed to insurance underwriting, which alone saw profits jump by an astonishing 302% year-over-year, totaling $3.4 billion.

However, while the operating profits soared, there was a noticeable slowdown in the investment gains from Berkshire’s diverse portfolio. These gains plummeted from $29.1 billion in the same period last year to $5.2 billion in the recent quarter. Furthermore, Berkshire has now sold more equities than it has purchased for nine consecutive quarters, accumulating over $134 billion in total equity sales throughout 2024. Notably, Buffett has been selectively reducing stakes in the company’s largest equity holdings, namely Apple and Bank of America.

This aggressive selling strategy contributed to the increase in Berkshire’s cash reserves, which reached a historic high of $334.2 billion, climbing from $325.2 billion at the conclusion of the third quarter of 2023. In his annual letter to shareholders, Buffett emphasized that this substantial cash position should not be misconstrued as a waning interest in investing. “Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” he stated, reaffirming his commitment to stock investments.

Buffett hinted that the elevated valuations in the current market landscape have contributed to his patient approach, explaining that often, “nothing looks compelling.” He also expressed confidence in his successor, Greg Abek, regarding future equity opportunities, even drawing a comparison to the late Charlie Munger.

Berkshire’s recent decision to halt stock buybacks is noteworthy as the conglomerate did not repurchase any shares in the fourth quarter nor in the first quarter of the current year, leading up to February 10. This stance has led to some investors and analysts voicing their impatience and seeking clarification on this strategy. Nevertheless, others maintain faith in Buffett’s cautious approach, anticipating that it may position the company favorably during any future market downturns.

Bill Stone, chief investment officer at Glenview Trust Company and a Berkshire shareholder, articulated this sentiment, suggesting that shareholders should take confidence in the company’s strategic management aimed at not only weathering economic challenges but also seizing opportunities when crises arise.

In terms of performance, Berkshire Hathaway has had a robust year, with its shares rallying by 25.5% in 2024, outperforming the S&P 500 and marking its best performance since 2021. Furthermore, the stock has risen more than 5% in the early months of 2025.

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