Warren Buffett's firm posts record profits

9:01 AM, Mar 1, 2014   |    comments
Warren Buffett, Chairman and CEO of Berkshire Hathaway, during an interview, in Omaha in May.
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(USA TODAY) The Oracle of Omaha has done it again.

Berkshire Hathaway, the investing conglomerate billionaire Warren Buffett chairs, posted a record profit last year of $19.5 billion, the company said in its annual report released Saturday.

The company also released its anticipated annual letter to shareholders from Buffett, one of the most successful and widely followed investors of all time.

Buffett has long urged an investing philosophy of taking large stakes in well-established companies for the long term. His annual letter is known for its explanation of his company's positions in stocks along with wry but folksy observations on investing and corporate America.

Berkshire Hathaway's net income was $19.5 billion in 2013, compared to $14.8 billion in 2012. Analysts had estimated earnings would be $18 billion.

Analysts said Berkshire's stellar performance in 2013 can be credited to improved economic growth since so many of his holdings are well-known consumer goods and services that do well when the economy is going strong.

Buffett, 83, has been CEO and chairman of the Omaha, Neb.-based investing conglomerate for more than 50 years and has overseen its growth into a $288 billion holding company.

MORE: Warren Buffett's top 10 favorite stocks

In his letter to shareholders, Buffett listed the varying ways the company progressed in the last year, saying that "on the operating front, just about everything turned out well for us last year - in certain cases very well."

He pointed out that it completed two large acquisitions, spending almost $18 billion to purchase all of NV Energy and took a major interest in H. J. Heinz.

Buffet also said the holding company increased its ownership interest last year in four well-known companies: American Express, Coca-Cola, IBM and Wells Fargo.

LETTER: Read Buffett's shareholder letter

Berkshire reported fourth-quarter net income of $4.99 billion, or $3,035 per Class A share, on revenue of $47 billion. That's up 10% from $4.55 billion, or $2,757 per Class A share, on revenue of $44.72 billion last year.

Berkshire's insurance companies, which include Geico and General Reinsurance, reported a $394 million operating profit in the fourth quarter, compared to last year's $19 million loss.

Berkshire's operating earnings, which exclude investments and derivatives, grew to $3.78 billion, or $2,297 per Class A share.

The three analysts surveyed by financial data company FactSet expected quarterly operating earnings of $2,495.42 per Class A share.

His top stock holdings, according to Berkshire's latest regulatory filing, include Wells Fargo, Coca-Cola, American Express and IBM. Rounding out the top 10 holdings are Procter & Gamble, ExxonMobil, Wal-Mart Stores, U.S. Bancorp, DirecTV and DaVita HealthCare Partners.In the fourth quarter, Berkshire increased its holdings in Wells Fargo, Wal-Mart, U.S. Bancorp and ExxonMobil. There was also a new stake, worth $262.4 million, in Liberty Global, a cable operator. Berkshire sold its shares in GlaxoSmithKline, the pharmaceutical giant, and DISH Network. And he reduced his stake in Suncor Energy and ConocoPhillips.

Shares of Berkshire Hathaway rose more than 13% last year. BRK.B shares gained 13.4% the past 52 weeks and closed up 1% Friday to $115.78. BRK.A shares added 13.7% the past year and rose 1.2% Friday to close at $173,708.

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