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Berkshire Coverage

Even in Face of Difficulty, Berkshire Impresses

Berkshire's non-insurance operations continue to be an added source of stability while reinsurance operations continue to struggle.

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There was little in wide-moat Berkshire Hathaway's (BRK.B) fourth-quarter and full-year results that would alter our long-term view of the firm. We do not expect to make any changes to our $235,000 per Class A share ($157 per Class B share) fair value estimate, or in our moat rating.

Fourth-quarter pretax operating earnings declined 19.2% when compared with the prior year's period, as investment and derivative gains/losses declined from $1.9 billion in the fourth quarter of 2013 to $311 million in the current year's period (as Berkshire was hit with both realized and unrealized losses on its equity investment portfolio during 2014). This contributed to a 2.4% decline in pretax operating earnings for the full year. Excluding the impact of the investment and derivative gains/losses (as well as other eliminations and adjustments), the company's pretax operating earnings increased 2.9% during the fourth quarter, with the same measure up 5.5% for the full year.

Greggory Warren does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.