Berkshire Hathaway Reports Record Cash Pile and Soaring Earnings in Q4 2023

Berkshire Cash Pile Hits Record, Earnings Soar

Berkshire Hathaway’s cash pile surged to a record high in the fourth quarter of 2023, accompanied by strong earnings, despite weakness in the railroad and energy sectors, according to the company’s recent earnings report.

It is worth mentioning that this is Berkshire’s first quarterly report following the death of Vice Chair Charlie Munger in November, and CEO Warren Buffett started his shareholder’s letter by acknowledging Munger’s significant contributions as the “Architect of Berkshire Hathaway” Investopedia.

Class A and B shares of Berkshire have seen remarkable growth, recording gains of approximately 17% and 15% respectively year-to-date, closing at a record high Investopedia.

Era Of Eye-Popping Performance Over?

Berkshire Hathaway’s Vice Chairman, Charlie Munger, sad passing in November was a significant loss for the company. The Vice Chairman is instrumental in Berkshire Hathaway’s success. Buffett, in his letter to shareholders, highlighted that despite the success of the company, chances of embarking on eye-popping performance opportunities are dwindling. Most opportunities, even within the US or internationally, face limitations, making the likelihood of Berkshire doubling in size nearly impossible in the near future. Investopedia

Berkshire in Occidental, Japan for the Long Haul

Berkshire’s latest 13-F filing revealed an increase in their stake in Occidental Petroleum, signaling a long-term commitment from the company. Buffett expressed admiration for Occidental Petroleum’s promising oil and gas holdings within the US and the company’s endeavors in carbon-capture initiatives. Berkshire also cited its intention to partner with five large and respected Japanese companies, Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo, upon their increased stakes. Berkshire, however, seeks to hold a 9.9% stake without assuming full control. Investopedia

Utilities, Railroads Disappoint

Buffett conveyed his disappointment with Berkshire Hathaway Energy’s earnings, explaining that the regulatory environment, as well as an increase of forest fires, adversely impacted profitability. Buffett also expressed his long-term optimism concerning the BNSF Railway, emphasizing its critical role in America’s economic futures, though recent operating earnings declined Investopedia.

Insurance Buoys Earnings

Berkshire Hathaway’s insurance business achieved exceptional performance in 2023, setting records in sales, float, and underwriting profits. While the underwriting business reported a significant increase in profits, the investment income surged as well, contributing to the positive results. Rising insurance costs due to more expensive cars and the increased frequency of natural disasters have driven earnings growth within the industry Investopedia. Berkshire Hathaway, Travelers Companies (TRV), and Allstate (ALL) have all reported substantial earnings growth due to increased insurance premiums Investopedia.