Posted on 03/06/2005 9:22:59 AM PST by sully777
NEW YORK (Reuters) - Berkshire Hathaway Inc., the holding company run by billionaire Warren Buffett, said on Saturday that quarterly profit surged 40 percent, helped by a $1.63 billion gain on a successful bet the U.S. dollar would fall.
For the year, profit fell 10 percent. Buffett, in his annual letter to Berkshire shareholders, said he increased his stake in foreign currency contracts, and wants to deploy more of Berkshire's $43.4 billion of cash.
Fourth-quarter net income for the Omaha, Nebraska-based company rose to $3.34 billion, or $2,172 per Class A share, from $2.39 billion, or $1,553 per share, a year earlier. Revenue increased 1 percent to $20 billion. The per-share figures are high because Berkshire has few shares outstanding.
Berkshire's Geico auto insurance unit in 2004 posted low double-digit percentage growth in premiums, offsetting similar declines at its General Re Corp. reinsurance unit.
"Berkshire's operating companies did just fine," said Keith Trauner, a portfolio manager at Fairholme Capital Management in Short Hills, New Jersey. The firm invests $1.4 billion, including more than 20 percent in Berkshire shares.
"Geico has been shooting the lights out," he said. "General Re is deliberately slowing its business, preferring to maintain underwriting profit rather than premium volume. That's the right way to run an insurance business as competition rises."
Berkshire's many businesses sell such things as paint, mobile homes and underwear. The company also has big stakes in such companies as American Express Co., Coca-Cola Co. and Gillette Co., which agreed in January to a takeover by Procter & Gamble Co.
Buffett, who is 74 and known as the "Oracle of Omaha," is the world's second richest person according to Forbes magazine, with a net worth of about $42 billion. Microsoft Corp. Chairman Bill Gates, a Berkshire director, is the richest.
CURRENCY BET
In his annual letter, Buffett said Berkshire increased its stake in foreign currency contracts to $21.4 billion, in 12 currencies, from $20 billion on Sept. 30 and $12 billion the previous December.
Buffett has wagered against the U.S. dollar since 2002 amid concern about rising U.S. trade and budget deficits.
Last year the trade deficit rose 24 percent to a record $617.7 billion, while the budget shortfall was a record $412.3 billion. President Bush last month projected the budget deficit will rise to $427 billion in fiscal 2005.
"The evidence grows that our trade policies will put unremitting pressure on the dollar for many years to come," Buffett said. "As W.C. Fields once said when asked for a handout: 'Sorry, son, all my money's tied up in currency."'
As of Dec. 31, the greenback bought 8.3 percent fewer euros and 6.9 percent fewer Japanese yen than it did on Sept. 30.
Buffett said promptly fixing the trade deficit would likely cause currency losses for Berkshire. But he said this might be offset by the benefits of a strong dollar and low inflation to the company's big stake in dollar-based assets.
"I STRUCK OUT"
Buffett also lamented Berkshire's inability to deploy its $43.4 billion of cash, which grew 21 percent last year. "Not a happy position," he called it.
"My hope was to make several multi-billion dollar acquisitions that would add new and significant streams of earnings," he said. "But I struck out." He said he will seek acquisitions in 2005, including one of at least $5 billion.
Berkshire also said the liquidator of two failed Australian insurers plans to assert claims against two subsidiaries whose deception it said helped cause the insolvencies. U.S. regulators are already examining whether some General Re policies improperly helped companies smooth earnings.
For the year, profit fell to $7.31 billion, or $4,753 per share, from $8.15 billion, or $5,309 per share. Revenue increased 16 percent to $74.4 billion.
Berkshire Class A shares closed on Friday at $89,300, and its Class B shares closed at $2,979, both on the New York Stock Exchange.
NEW YORK (Reuters) - Berkshire Hathaway Inc. , the holding company run by billionaire Warren Buffett, on Saturday said the liquidator of two Australian insurers accused two Berkshire entities of deceptive conduct that helped cause the insurers' insolvency.
In its annual report, Omaha, Nebraska-based Berkshire said the liquidator's claims concern insurance transactions that Berkshire's General Re Australia subsidiary entered into in May and June 1998 with FAI Insurance Ltd., which was bought the following year by HIH Insurance Ltd.
Berkshire said the liquidator contends that General Re Australia and Kolnische Ruckversicherungs-Gesellschaft, which are subsidiaries of Berkshire's General Re Corp.
Berkshire's Geico auto insurance unit in 2004 posted low double-digit percentage growth in premiums, offsetting similar declines at its General Re Corp. reinsurance unit."Berkshire's operating companies did just fine," said Keith Trauner, a portfolio manager at Fairholme Capital Management in Short Hills, New Jersey. The firm invests $1.4 billion, including more than 20 percent in Berkshire shares.
"Geico has been shooting the lights out," he said. "General Re is deliberately slowing its business, preferring to maintain underwriting profit rather than premium volume. That's the right way to run an insurance business as competition rises."
One more reason why I don't use Geico Insurance.
But, hey, life is short and then we die.
My ignorance is going to show here, so will someone clue me in please?
I don't see what is wrong with the position they took. After all, did THEY make the dollar fall? Isn't it kind of like betting on a ball team, either for them to win or lose? And is a falling dollar really a bad thing? I'm of the opinion it has helped us in some ways.
Just saw where Buffett made his next big investment. He bought shares in the depressed stock of Krispy Kreme Donuts.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.