Berkshire Hathaway Q4 Profit Surges

Ann Santiago
February 25, 2018

Berkshire CEO Warren Buffett said he expects the company's insurers will have to pay about $3 billion in claims related to the hurricanes that struck Texas, Florida and Puerto Rico last fall.

"In his early years, Jack was frequently mocked by the investment-management industry", Buffett said last year.

Berkshire on Saturday reported a record quarterly and annual profit, benefiting from a lower USA corporate income tax rate.

The billionaire and CEO of Berkshire Hathaway highlighted a $29 billion tax gain for his company, bemoaned a lack of good deals and reminded his readers that owning stocks through low-priced index funds was the best way to build wealth over time.

Berkshire's gain in net worth during 2017 was $65.3 billion which increased per-share book value by 23% since yearend 2016 to $211,750 per Class A equivalent share ($141.17 per Class B equivalent share).

Buffett acknowledges in the annual letter, which was published on Saturday, that the economy is volatile, and that the markets "occasionally do insane things". "The remaining $29 billion was delivered to us in December when Congress rewrote the U.S. Tax Code", Buffett wrote. But only $36bn came from Berkshire's operations.

Not so for Berkshire, Buffett said.

"That. requirement proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high", Buffett wrote.

"Price seemed nearly irrelevant to an army of optimistic purchasers", Buffett said.

"If Wall Street analysts or board members urge that brand of CEO to consider possible acquisitions, it's a bit like telling your ripening teenager to be sure to have a normal sex life", he wrote.

On Friday, Berkshire's Class A shares closed at $304,020.01, having risen above $300,000 a share for the first time ever in December on expectations that Trump's United States tax overhaul would pass into law. It's a number that sticks out like a sore thumb compared to gains from previous years.

Berkshire also owns clothing, furniture and jewelry firms.

Warren Buffett said in his annual letter the practice of managing portfolio risk using a specified ratio of bonds-to-stocks is flawed. That ended past year, and Buffett - who bet slow, steady gains by the S^and^P 500 would beat out hedge funds over the decade - won with flying colors.

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