Berkshire Hathaway earned a net income of $81.4bn in 2019—making it the second most profitable company in the world
22nd Warren Buffett reported that the conglomerate he runs, Berkshire Hathaway, earned net income of $81.4bn in 2019. That makes Berkshire, America’s biggest non-tech firm by market value, more profitable than any other company anywhere bar Saudi Aramco, an oil giant.
The surge in unrealised gains was driven by the performance of Berkshire’s holdings in giant public companies such as Apple and Bank of America, which Mr Buffett and his colleagues pick like any old asset manager. Last year these stakes did a bit better than the500 as a whole—chiefly thanks to an epic big-tech bull run, which supercharged the returns from Berkshire’s 5.7% stake in the iPhone-maker.
Mr Buffett prefers the “real world” to “accounting-land”, as he put it in his annual letter, referring to the new standards on treatment of unrealised gains and losses. But in recent years he has struggled to articulate a consistent way of measuring the firm. At points he has endorsed tracking book value and at other times “operating earnings”, a proxy for the cash generated by the businesses Berkshire owns outright .
One way of getting your head round Berkshire is to split it into two parts: a volatile financial arm, which includes its equity portfolio and insurance activities, and a steadier industrial group, composed of unlisted firms such as, a railway, and Precision Castparts, a manufacturer. The second category are the sort of company the no-nonsense Nebraskan professes to understand, and has spent a decade buying up.
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