Warren Buffett's Berkshire Hathaway Reports Q4 Operating Earnings of $5.2 Billion

Berkshire Hathaway, run by billionaire investor Warren Buffett, posts fourth-quarter operating earnings of $5.02 billion, up 14% from a year earlier.
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Berkshire Hathaway  (BRK.A) - Get Report  (BRK.B) - Get Report, run by billionaire investor Warren Buffett, posted fourth-quarter operating earnings of $5.02 billion, up 14% from a year earlier.

Berkshire Hathaway reported net earnings of $35.84 billion, or $23,015 per Class A share. Earnings were $15.34 per Class B share compared with $11.94 a share a year earlier.

The period included investment and derivatives gains of $30.45 billion.

Class A shares have outsized voting rights compared with class B shares.

Buffett, Berkshire Hathaway's chairman, told shareholders in his widely anticipated annual letter they should "never bet against America."

“In its brief 232 years of existence ... there has been no incubator for unleashing human potential like America,” Buffett wrote in the letter released Saturday. “Despite some severe interruptions, our country’s economic progress has been breathtaking. Our unwavering conclusion: Never bet against America.”

Berkshire Hathaway said Saturday it bought back about $9 billion in stock during the fourth quarter, and about $25 billion of stock in 2020, reflecting the relative value Buffett sees in his own company’s stock vs. other investment possibilities. 

Buffett told shareholders the company "repurchased more shares since year-end, and is likely to further reduce its share count in the future.

“That action increased your ownership in all of Berkshire’s businesses by 5.2% without requiring you to so much as touch your wallet.”

"Following criteria Charlie (Vice Chairman Munger) and I have long recommended, we made those purchases because we believed they would both enhance the intrinsic value per share for continuing shareholders and would leave Berkshire with more than ample funds for any opportunities or problems it might encounter. 

"In no way do we think that Berkshire shares should be repurchased at simply any price. I emphasize that point because American CEOs have an embarrassing record of devoting more company funds to repurchases when prices have risen than when they have tanked. Our approach is exactly the reverse," Buffett said.

Berkshire Hathaway's available cash and short-term Treasury bonds totaled more than $138 billion in the fourth quarter.

Buffett admitted in the letter that he made a mistake back in 2016 in acquiring Precision Castparts. The company recorded an $11 billion write-down related to the purchase.

"I paid too much for the company. No one misled me in any way - I was simply too optimistic about PCC’s normalized profit potential. Last year, my miscalculation was laid bare by adverse developments throughout the aerospace industry, PCC’s most important source of customers," Buffett said.

Berkshire Hathaway's Class A shares rose about 2.4% in 2020, below the S&P 500's gains of 16.4%.

Joseph Woelfel contributed to this article.