Berkshire Hathaway’s Record Cash Reserves Leave Buffett Pessimistic about ‘Eye-Popping’ Results

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Berkshire Hathaway, led by Warren Buffett, has reported a staggering cash reserve of $167.6 billion in the fourth quarter, marking a new high for the conglomerate. However, Buffett expressed dismay over the lack of substantial deals that could drive remarkable performance for the firm.

Buffett lamented the scarcity of meaningful opportunities for investment, both within and outside the United States. Despite efforts to ramp up acquisition activities in recent years, Berkshire has struggled to find deals that could match Buffett’s historic successes.

While Berkshire saw an increase in operating earnings to $8.48 billion in the fourth quarter, up from $6.63 billion a year earlier, Buffett highlighted the challenges of finding companies capable of significantly impacting Berkshire’s portfolio.

Despite recent acquisitions, including shares in Occidental Petroleum Corp. and a deal with Alleghany Corp., Buffett remains cautious about the firm’s investment landscape. Berkshire also increased its stake in Japanese trading houses last year.

Buffett emphasized the importance of share repurchases as an alternative amidst the dearth of attractive investment options. Berkshire spent $2.2 billion on buybacks in the fourth quarter, totaling $9.2 billion for the year.

The company’s performance serves as a barometer for the US economy due to its diverse range of businesses. However, Berkshire’s earnings from railroad operations and utilities experienced declines in the fourth quarter.

This marks Berkshire’s first earnings report since the passing of Charlie Munger, Buffett’s long-time investing partner and vice chairman. Buffett dedicated a significant portion of the shareholder letter to Munger’s contributions to the firm.

Berkshire’s insurance underwriting earnings soared to $848 million for the period, driven by robust performance from its Geico unit. Including investment and derivatives, Berkshire posted net earnings of $37.6 billion for the quarter.

Buffett remains cautious despite the strong financial position of Berkshire, highlighting the challenges of finding lucrative investment opportunities in the current market landscape.