Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B) (NYSE:BRK.A) delivered net earnings of $18.1 billion in Q4 2022, down 54.2% from the previous year. The decline was due to the volatility in the stock market that weighed on the company’s equity investments.
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Investment and derivative gains (63% of the company’s earnings) fell by about 65% year-over-year and were majorly responsible for Berkshire’s poor performance. The metric measures unrealized gains or losses arising from the change in market prices of the company’s investments in equity securities.
Berkshire’s operating earnings (net earnings excluding investment and derivative gains/losses and impairments of goodwill and intangible assets) declined 8% to $6.71 billion in the quarter. Weakness in the insurance underwriting and railroad business was offset by gains in insurance investment income as well as utilities and energy businesses. Furthermore, earnings were impacted by forex losses related to the non-U.S. dollar-denominated debt.
Regarding capital deployment activities, the company bought back about $2.6 billion worth of its common stock during the fourth quarter of 2022. Also, as of 2022-end, insurance float (net liabilities assumed under insurance contracts) was nearly $164 billion, reflecting an increase of $17 billion since the end of 2021.
Overall, Berkshire’s operating profit grew 12% to $30.8 billion in 2022, despite high inflation and supply-chain issues. Nevertheless, the company reported a net loss of $22.8 billion against net earnings of $89.8 billion in 2021.
Is Berkshire a Good Stock to Buy?
BRK.B stock has negative signals from hedge funds and insiders. TipRanks’ data shows that hedge funds sold 5.5 million Berkshire stock last quarter. Moreover, insiders have sold BRK.B stock worth $1.3 million over the last three months. On the flip side, bloggers and news sentiment are positive.
While Buffett has a stellar long-term track record, recession fears and volatility in the stock market continue to weigh on his top picks, including Apple (AAPL) and Bank of America (BAC).
