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Berkshire Hathaway Inc Class B BRK.B

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Morningstar’s Analysis

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Unrealized Investment Gains and Better-Than-Expected Operating Results Lift Berkshire's 4Q Results

Greggory Warren, CFA Sector Strategist

Analyst Note

| Greggory Warren, CFA |

We expect to raise our fair value estimate for wide-moat-rated Berkshire Hathaway (in the neighborhood of 5%-10%) following a stronger conclusion to the company's fiscal year than we had been projecting. Fourth-quarter (full-year) revenue, which includes unrealized and realized gains/losses from Berkshire's investments and derivatives portfolios, increased 7.3% (declined 12.5%) year over year to $103.7 billion ($286.3 billion). Excluding the impact of investment and derivative gains/losses and other adjustments, fourth-quarter (full-year) operating revenue declined 1.3% (3.4%) to $64.4 billion ($245.4 billion). Operating earnings, exclusive of the impact of investment and derivative gains/losses but including goodwill and intangible asset impairments (including $9.8 billion attributable to Berkshire's 2016 acquisition of Precision Castparts), increased 13.6% (declined 8.6%) year over year to $5.0 billion ($21.9 billion) during the December quarter (full year). When including the impact of the investment and derivative gains/losses, net earnings increased 23.8% (fell 47.6%) to $35.8 billion ($42.5 billion).

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Company Profile

Business Description

Berkshire Hathaway Inc is a holding company with a wide array of subsidiaries engaged in diverse activities. The firm's core business segment is insurance, run primarily through Geico, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group. Berkshire has used the excess cash thrown off from these and its other operations over the years to acquire Burlington Northern Santa Fe (railroad), Berkshire Hathaway Energy (utilities and energy distributors), and the firms that make up its manufacturing, service, and retailing operations (which include five of Berkshire's largest noninsurance pretax earnings generators: Precision Castparts, Lubrizol, Clayton Homes, Marmon and IMC/ISCAR). The conglomerate is unique in that it is run on a completely decentralized basis.

3555 Farnam Street
Omaha, NE, 68131
T +1 402 346-1400
Sector Financial Services
Industry Insurance - Diversified
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2020
Stock Type Aggressive Growth
Employees 360,000