Tax law gives Buffett’s Berkshire Hathaway a $29B boost in value

Warren Buffett’s Berkshire Hathaway Inc. was a big winner from the recent tax overhaul.

Book value, a metric he’s called a “crude, but useful” way to track the conglomerate’s worth, climbed 13 percent to $211,750 per Class A share at the end of 2017 compared to three months earlier, the company said Saturday in a statement. Analysts at Barclays Plc last month predicted that the measure of assets minus liabilities would rise as Berkshire lowered its tax liability on some appreciated investments. Buffett got a $29 billion boost to net earnings in the fourth quarter from the tax code changes.

Buffett had a mixed reaction to the tax overhaul passed by Congress last year. In January, he praised how the changes mean business owners will get a bigger share of profits and said he would have voted for it as a representative of Berkshire’s investors. Still, when asked if he would have encouraged legislators to support or fight it, Buffett said he would have gone with a different bill. The billionaire investor has long advocated for higher taxes on the wealthy, while the new law reduced the top income-tax rate.

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc.
Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., speaks during a Bloomberg Television interview in New York, U.S., on Wednesday, Aug. 30, 2017. Buffett said the rally in markets over the last several years has made it harder to find bargains, but that stocks remain his choice over bonds. Photographer: Christopher Goodney/Bloomberg

Here are some other takeaways from Berkshire’s earnings report:

  • Operating earnings, which excludes some fluctuations in investments and derivatives, slumped 24 percent to $3.3 billion during the fourth quarter compared to the same period a year earlier. Berkshire’s cash pile swelled to $116 billion from $109 billion in the third quarter.
  • Full-year earnings from BNSF, the company’s railroad, climbed 11 percent to about $4 billion in 2017 compared to a year earlier.
  • Manufacturing, services and retailing operations reported that profit increased to $6.2 billion last year from $5.6 billion in 2016.
  • The insurance businesses reported an underwriting loss of $2.2 billion as hurricanes and other natural disasters in 2017 weighed on results, leading to the first annual underwriting loss after a 14-year streak of gains, Buffett said in the letter.
Bloomberg News
Tax reform Trump tax plan Corporate taxes Warren Buffett Berkshire Hathaway
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