Warren Buffett: Stock gains power Buffett’s Berkshire Hathaway to higher profit

Warren Buffett’s Berkshire Hathaway Inc on Saturday said quarterly operating income rose 14 per cent, aided by improved results from its insurance businesses, while soaring prices of stock holdings such as Apple Inc led to a nearly $36 billion overall profit.

Fourth-quarter operating income rose to $5.02 billion, or approximately $3,252 per Class A share, from $4.42 billion, a year earlier.

Net income, reflecting the stock gains, rose 23 per cent to $35.84 billion from $29.16 billion a year earlier.

For all of 2020, operating income fell 9 per cent to $21.92 billion, while net income fell 48 per cent to $81.42 billion.

Berkshire, whose shares trailed the broader market over the last decade and significantly in 2019 and 2020, repurchased about $9 billion of stock in the quarter, a sign Buffett considers his Omaha, Nebraska-based conglomerate undervalued.

For all of 2020, Berkshire said it bought back $24.7 billion of its own stock, topping its old record $5 billion in 2019.

“At a discount of 40 per cent to intrinsic value, the repurchases looked extraordinarily compelling,” said Tom Russo, a partner at Gardner, Russo & Gardner in Lancaster, Pennsylvania, a longtime Berkshire shareholder. “Repurchases capture forever the benefits of Berkshire’s businesses for the remaining shareholders.”

Berkshire stock has risen 4.8 per cent this year, beating the Standard & Poor’s 500’s 1.5 per cent gain.