Berkshire Hathaway’s Q4 Earnings Show Buffett Still Has It

Wow, Buffett knocked it out of the park:

Berkshire Hathaway 4th-quarter profit up 32 percent

Berkshire Profit Gains 32% to $5.48 Billion, Capping Record Year

Berkshire’s Earnings: A Surprise Boost From Kraft Heinz, But an Off Year at Geico

Warren Buffett Attacks Wall Street Over ‘Phony’ Earnings

 

Buffett says it’s possible that the offending analysts “don’t know better.” But more likely, Buffett says, the analysts go along with the phony numbers because they fear losing access to management, which is key to a Wall Street analyst’s job these days. Buffett also says analysts may be swept up by a herd mentality and go along with these inflated financials because everyone else is doing it. None of these reasons lets them off the hook, Buffett says.

“Whatever their reasoning, these analysts are guilty of propagating misleading numbers that can deceive investors,” Buffett writes.

Based on pro-forma earnings, profits for the S&P 500 rose an average of 0.4% in 2015. But if you stick with figures that conform to official accounting rules, profits actually plunged nearly 13%.

Clearly Buffett reads PSW!  wink

Oddly, Buffett’s denouncement of executives who doctor their earnings comes during a section of the his annual letter in which he does a bit of his own selective accounting. Buffett says that Berkshire shareholders would do better ignoring a portion of the company’s amortization costs. Buffett acknowledges the slight contradiction by saying that he gives that advice with “some trepidation.” But he says amortization, unlike compensation, is not a real expense. What’s more, Buffett says investors when


continue reading