How Did Warren Buffett and Berkshire Hathaway Beat The Street In Q4?

The Oracle of Omaha and Berkshire Hathaway are a beacon of hope to weary investors during a time of great turmoil.

Feb. 28, 2022

Like an oasis amidst a desert of despair, this investor’s waning morale managed to find genuine solace in Berkshire Hathaway’s (NYSE: BRK.B) earnings win on Saturday.

As the world plunges into the darkness of inflation, looming rate cuts, and war, how did Buffett & Co. produce a much-needed win?

Berkshire could be the anchor we all need…

Sure, Berkshire’s impressive results span a retrospectively blissful time of ignorance towards any conflict in Ukraine, but that doesn’t make it any less welcome. 

The conglomerate posted some impressive results on Saturday morning’s earnings call: 

  • Operating earnings (total profits) reached $7.3 billion — up 45% year-over-year (YoY)
  • Berkshire’s operating revenue for Q4 totaled $39.65 billion for the quarter — up 10%
  • The company also used $6.9 billion to buy back shares in the fourth quarter. 
  • Despite this, total cash-in-hand by the end of 2021 was at about $146.72 billion — that’s enough to buy roughly 16 Peloton’s (business, not bikes) as of Friday’s closing price. 

However, don’t expect Berkshire to make any large acquisitions any time soon, with big man Buffett explaining in his accompanying annual shareholder letter that he and Vice Chairman Charlie Munger found little that “excites” them — hence the share buybacks. 

Speaking of, it’s no small thing that Buffett and Munger — arguably two of history’s greatest investors — have so much faith in their own business, that they put buying back Berkshire shares ahead of acquiring a new company. That should tell investors all they need to know about the value of Berkshire as a business, and judging by its 2021 numbers, the company’s value as an anchor in your portfolio. 

With a hand in old-world businesses such as insurance and energy, as well as huge stakes in the likes of Apple and Coca-Cola, it’s like owning an ETF with as close to a modern Nostradamus at the helm as one can get.