Berkshire Hathaway will share Warren Buffett's latest letter to shareholders on Saturday. The conglomerate will report fourth-quarter earnings results as well.
The annual letters are much anticipated, sharing the Berkshire chief's insights on the business, the economy, investing and life itself.
Warren Buffett's Stock Buybacks, Cash Pile
One closely watched item is likely to be the conglomerate's ever-growing cash hoard — more than $300 billion at the end of Q3 and likely even bigger now given that Berkshire sold several stocks in Q4.
Berkshire slashed its position in Bank of America last quarter while adding shares in Occidental Petroleum. It held steady on Apple and Chevron after a slew of cuts to those positions in prior quarters. All four are huge positions in Berkshire's stock investment portfolio, so investors may hope for some light shed on Buffett's reasoning.
Another point of interest will be whether Berkshire resumes share buybacks. The company scaled back repurchases for several quarters before abruptly halting them in Q3 2024, as shares rose to highs.
If there's no bargain to be found on the stock markets, Berkshire tends to buys back its own stock.
But its annual buybacks peaked in 2021 at $27 billion. Buffett only likes to buy back Berkshire Hathaway stock when its price falls below what he considers its intrinsic value. He dislikes paying inflated prices for any company's shares, including his own.
Class-B shares of Berkshire Hathaway fell a fraction in Friday's stock market trading. Berkshire Hathaway stock has formed a cup base with a 491.67 buy point, the MarketSurge chart shows.
Berkshire Hathaway Earnings Set To Rise
For the fourth quarter, analysts expect operating EPS of $4.62, rising 18% from a year ago, FactSet shows. The company's insurance business is again likely to offset weak growth in the energy segment.
CFRA Research analyst Cathy Siefert is watching Geico. She said the car insurer accounts for 13%-15% of insurance revenues, but its growth has lagged those of peers such as Allstate and Progressive.
Gabelli Funds portfolio manager Macrae Sykes said he is hoping Buffett may address recent catastrophic events. By some estimates, insured losses from January's Los Angeles wildfires could top $40 billion.
Berkshire is a small player in the state's insurance markets but its reinsurance business could suffer. Geico could also see auto claims related to the deadly and destructive wildfires.
Further, Buffett may share his latest thoughts on what he calls the "American tailwind," given Trump's renewed trade war. Previously, the Buffett chief has taken an unfavorable view of tariffs, which can lead to inflation that hurts both consumers and businesses.
More generally, investors may hope for more succession details with Buffett turning 95 this year.
They already know that Greg Abel, who oversees all of Berkshire's varied noninsurance businesses, has been tapped to succeed Buffett. Beyond that, much remains unknown.
Berkshire runs hundreds of subsidiaries across various market segments on a highly decentralized basis. How that business strategy and the various managment teams may evolve under Abel is being watched.
