New York/Seattle: Warren Buffett’s Berkshire Hathaway Inc. said fourth-quarter profit rose 15% as investment gains climbed.
Net income climbed to $6.29 billion, or $3,823 a share, from $5.48 billion, or $3,333, a year earlier, the Omaha, Nebraska-based company said Saturday in a statement. Operating earnings, which exclude some investment results, were $2,665 a share, compared with the average $2,717 estimate of three analysts surveyed by Bloomberg.
While Buffett is widely known as a gifted stock picker, Berkshire derives most of its income from the businesses he’s bought during his five decades running the firm. Its dozens of subsidiaries include auto insurer Geico, railroad BNSF, a network of auto dealerships, retailers and electric utilities.
The 86-year-old billionaire keeps adding to the mix. Last year, he completed deals for battery maker Duracell and Precision Castparts, a supplier to the aerospace industry, helping to boost profit in his company’s manufacturing segment.
Buffett tells investors to focus on the earnings from his stable of operating businesses, rather than one-time gains or losses on Berkshire’s securities portfolio. That’s because results can fluctuate widely on investments and derivatives contracts that he entered years ago.
In the fourth quarter, Dow Chemical Co. converted Berkshire’s $3 billion preferred stake to more than $4 billion of common stock. The investment dates to the chemical maker’s 2009 takeover of Rohm & Haas, a transaction that Buffett helped finance.
Berkshire has been a major beneficiary of the rally in stocks since Donald Trump was elected US president. Class A shares have climbed 15% since 8 November, bringing the company’s market capitalization above $400 billion for the first time. That compares with the 11% increase in the S&P 500 Index.