By Jonathan Stempel
(Reuters) -Warren Buffett's Berkshire Hathaway on Saturday said operating profit set a record in the fourth quarter and for the third straight calendar year, bolstered by improved underwriting and higher investment income in its insurance businesses.
Much of that income came from Berkshire's enormous cash stake, which ended 2024 at a record $334.2 billion, twice as much as a year earlier.
In his annual letter to Berkshire shareholders, the 94-year-old Buffett assured that Berkshire would prefer investing in businesses to holding cash.
But he also said his Omaha, Nebraska-based conglomerate "did better than I expected," though 53% of its 189 operating businesses posted lower earnings.
He attributed the improvement in part to higher yields on U.S. Treasury bills, and improvement at the Geico car insurer, which benefited from improved pricing and tighter underwriting as loss rates from accidents declined.
"Those were incredible numbers," said Thomas Russo, a partner at Gardner Russo & Quinn in Lancaster, Pennsylvania, which has owned Berkshire stock since the 1980s. "You really saw the power of Berkshire's insurance operations and investments."
Buffett singled out Todd Combs, Geico's chief executive since 2020 and also a Berkshire investment manager, saying he has "reshaped Geico in a major way" by increasing efficiency and improving underwriting, though more work remains.
Geico cut more than 2,300 jobs last year, and has shed about 10,000 jobs--26% of its workforce--since the end of 2022.
NO BUYBACKS
Operating profit rose 71% to $14.53 billion in the fourth quarter, and 27% to $47.44 billion in 2024.
Quarterly net income totaled $19.69 billion, or $13,695 per average equivalent share, as the value of Berkshire's holdings in Apple, American Express and other stocks increased. For the year, net income totaled $89 billion.
Buffett considers net results misleading because they include gains and losses on investments that Berkshire has not sold and sometimes has no plan to sell.
The increased cash stake in 2024 largely came from $143.4 billion of stock sales, including 62% of Berkshire's holdings in Apple and one-third of its stake in Bank of America.
Berkshire has been a net seller of stocks for nine consecutive quarters.
Meanwhile, Berkshire spent just $2.9 billion repurchasing its own stock in 2024. Through February 10, it has conducted no repurchases since last May.
Bill Smead, a longtime Berkshire investor at Smead Capital Management in Phoenix, noted Buffett's comment in the annual letter that Berkshire only "very infrequently" finds itself knee-deep in things to buy.