Berkshire Hathaway Posts Losses — But Remains Optimistic

Topline

Warren Buffett’s Berkshire Hathaway—a conglomerate that owns Geico and holds majority shares in companies like American Express, Bank of America and Coca-Cola—posted fourth-quarter losses and nearly $23 billion in net losses for 2022, as Buffett remained optimistic despite his investment company struggling amid poor foreign exchange rates.

Key Facts

Berkshire posted a loss of $22.82 billion for 2022 and a 54% decline in fourth-quarter income, down from $39.65 billion in 2021 to $18.16 billion, according to Buffett’s annual letter to shareholders Saturday.

Operating profit fell 8% to $6.71 billion, down from $7.29 billion the previous year.

Berkshire repurchased $2.6 billion of its own stock during the fourth quarter, increasing its full-year buybacks to $7.9 billion.

Despite posting losses, Buffett noted that “Berkshire had a good year in 2022,” as the company’s operating earnings rose to an all-time high of $30.8 billion and total revenue rose 9.4% to $302.1 billion.

The company noted some of its losses came as a result of poor foreign exchange rates as the U.S. dollar lost value—with an inflation rate that peaked at 9.1% in June 2022.

Buffett expects the company’s gains to be “meaningfully positive in future decades,” adding the fourth-quarter losses—which are “regularly and mindlessly headlined by media”—effectively and “totally misinform investors.”

Forbes Valuation

Buffett, also known as the “Oracle of Omaha,” is worth $106 billion, according to our estimates. Buffett is the fifth-richest person in the world.

Crucial Quote

Buffett emphasized his optimism for the U.S. economy, adding he has “been investing for 80 years—more than one-third of our country’s lifetime.” Though he has observed an “almost enthusiasm” from Americans for “self-criticism and self-doubt, I have yet to see a time when it made sense to make a long-term bet against America.”

Key Background

Buffett, an Omaha, Nebraska native, is the son of a U.S. congressman. He first bought stock at age 11 and first filed taxes at age 13. Buffett became CEO of Berkshire Hathaway–a company initially founded in 1839 to oversee New England-based textile firms—in 1965. By the end of 2022, the company held majority shares in a number of major U.S. companies—including American Express, Bank of America, Chevron, Coca-Cola, Occidental Petroleum and Paramount Global—as “Berkshire will always hold a boatload of cash” and “a wide array of businesses,” Buffett said. The billionaire has continued to be optimistic about the growth of the U.S. economy and has promoted efforts for philanthropy among other billionaires, like Bill Gates. “America would have done fine without Berkshire,” Buffett added, though “the reverse is not true.”

Further Reading

Warren Buffett’s Berkshire Hathaway Hits All-Time High At $700 Billion Market Valuation (Forbes)

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