How Much Does Berkshire Hathaway Make Per Day?

The story of how Warren Buffett turned a failing textile company into a global conglomerate has been well told, and for good reason. Buffett’s fascinating rise from paperboy to billionaire exemplifies the dream of so many investors.

But the story is far from over for the former textile mill, Berkshire Hathaway (NYSE: BRK.A, BRK.B). In 2023, the company reported a profit of $97 billion, which was an all-time high.

At the age of 93, Buffett still serves as the CEO of Berkshire, though Greg Abel has been tagged as his successor.

Buffett’s long-time friend and partner Charlie Munger passed away in November, and Buffett memorialized Munger in his annual letter to shareholders. The letter has been a long-standing tradition for Buffett, and he often uses it to give his insights into the state of the global market.

There is always intense attention on the stocks that Berkshire is buying, and Buffett highlighted a few of his favorites. But what stands out from Berkshire’s reports is the sheer amount of cash the company has at its disposal. The interest income from Berkshire’s cash on hand could surpass the cash flow of some Fortune 500 companies.

So just how much does this former textile mill make on any given day?

What Are Berkshire Hathaway’s Financials?

In the 4th quarter of 2023, 77% of the company’s $37.57 billion in net earnings came from investment gains. That was 154% higher than the same quarter of 2022.

The stock market rally fueled that upswing, but it also illustrates how Berkshire’s profits can fluctuate with the market. In 2022, Berkshire Hathaway reported an annual net loss of $22.7 billion.

Berkshire also owns companies in the insurance, railroad, and utilities sectors. Net earnings from those ventures was $8.48 billion in the 4th quarter, which was a 28% increase year-over-year. A large part of that success was the company’s insurance operations, where Berkshire owns the Geico brand.

Berkshire Hathaway’s railroad and energy ventures both posted losses for the quarter, however, which only serves to highlight the importance of its investment portfolio.

What Is The Interest Income For Berkshire Hathaway?

One way Berkshire has traditionally hedged against downside risk is through generous cash reserves. The company had $167.6 billion in cash on hand at the end of the 4th quarter, which is up from $157.2 billion in the prior quarter. Part of the reason Berkshire held on to its stockpile is because it hasn’t targeted stock opportunities it liked.

However, the interest income from the company’s cash reserves alone is staggering. Buffett has been very vocal about his proclivity for US treasury bills. If the company took $126 billion from its reserves and invested in 5.3% yielding 3-month treasury bills, Berkshire would rake in $26 million per weekday.

That works out to $2.34 billion in interest in a single quarter. While that may not add up compared to the $7.28 billion in free cash flow that AI-darling Nvidia generated in the 4th quarter, Nvidia’s income comes from operations. Berkshire’s interest income comes solely from the cash it has on hand.

What Stocks Has Berkshire Hathaway Bought?

Buffett built Berkshire Hathaway to be, in the words of Nassim Taleb, anti-fragile, meaning it can withstand shocks.

In his annual letter, Buffett said that the company would only slightly outperform the average company from here on out. While that may concern some investors, it is a nod to Berkshire’s size. The Law of Large Numbers limits Berkshire’s ability to outperform.

Another limiting factor is the lack of investment opportunities. Buffett doesn’t see any quality opportunities abroad and very few stateside. 

Buffett is still supporting the stocks that have rewarded him over the years. Coca-Cola, Apple, and American Express have been his perennial favorites. He also highlighted Berkshire’s increased stake in Occidental Petroleum. Berkshire now owns 28% of the oil and gas company.

Buffett also mentioned the company’s increased investment in Japan. He bought into five different companies: Mitsubishi, Mitsui, Sumitomo, Itochu, and Marubeni. Buffett praised the leadership of those companies and announced his intention to continue investing in all of them.

Will Berkshire Hathaway Stock Keep Rising?

So much attention is paid to what Buffett is buying, that buying shares in Berkshire Hathaway itself is not discussed as often. But BRK.B has outperformed the S&P 500 over the past 5 years, delivering a 105% return to an 81.5% return for the index.

The company’s shares have been on a nearly consistent rise over that time compared to the sharp pullbacks and upswings of the market at large. That’s more proof that Buffett’s emphasis on stability has paid off.

That success is likely to continue, according to Wall Street. The average price target for BRK.B is $540 per share, which would be a 31.4% increase from where the stock currently trades. The high price target is $645, which would be an incredible 57% gain. The low forecast still has BRK.B jumping 5.8% to $435 over the next year.

How Much Does Berkshire Hathaway Make Per Day?

Berkshire Hathaway makes $24,249,315.06 per day from interest on its cash balance alone. When cash flows from operations are included that number is substantially larger.

All of the analysts believe that Berkshire Hathaway shares are a buy, and that the stock is poised to go up. That’s a testament to Buffett’s investing prowess. Berkshire’s investment gains in the 4th quarter of 2023 were a record $29 billion, which equates to a $32 million daily return from Berkshire’s stock portfolio alone.

The company has been able to stockpile cash at a record rate as a result. That means it can use simple short-term investments like treasury bills to make a staggering amount of money. And Berkshire wouldn’t incur the risk that other companies face when their cash flow is driven by operations.

Despite Buffett’s remarks, Berkshire Hathaway is not the average company. It can weather headwinds that could throw other companies adrift, and there is little reason to believe that Berkshire won’t stay on course in the years ahead.

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