Beth Belton and Laura Petrecca

USA TODAY

Berkshire Hathaway reports 2013 net income of %2419.5 billion vs. %2414.8 billion in 2012

Analysts%3A Improved economic growth helped the holding company to perform well last year

Buffett%2C 83%2C has been CEO and chairman of the Berkshire Hathaway for nearly 50 years

The Oracle of Omaha has done it again -- though Warren Buffett wasn't able to best the stellar returns of the Standard & Poor's 500 in 2013.

Berkshire Hathaway, the investing conglomerate billionaire Buffett chairs, posted a record profit last year of $19.5 billion, the company said in its annual report released Saturday. Analysts had estimated earnings would be $18 billion.

In 2012, its net income was $14.8 billion.

Analysts said Berkshire's solid 2013 performance can be credited to improved economic growth since so many of his holdings are well-known consumer goods and services that do well when the economy is going strong.

The per-share book value of its class A and class B stock rose by 18.2% in 2013, said Buffett in his annual letter to shareholders.

The S&P had returns of about 30% last year.

"Berkshire's book value and intrinsic value will outperform the S&P in years when the market is down or moderately up. We expect to fall short, though, in years when the market is strong – as we did in 2013," Buffett said in the letter. "We have underperformed in 10 of our 49 years, with all but one of our shortfalls occurring when the S&P gain exceeded 15%."

Buffett, 83, has been CEO and chairman of the Omaha, Neb.-based investing conglomerate for nearly 50 years and has overseen its growth into a $286 billion holding company. He is one of the most successful and widely followed investors of all time.

Buffett has long urged an investing philosophy of taking large stakes in well-established companies for the long term, but in this year's shareholder letter, he also advocated the benefits of investing in a low-cost S&P index fund.

That might seem like an "odd message" to some, since Buffett is known to invest in individual company stocks, says Robert Johnson, a Berkshire Hathaway shareholder and professor of finance at the Heider School of Business at Omaha, Neb.-based Creighton University.

But this is the point: A good index fund can dramatically reduce risk for the lay investor, Johnson says.

"What gets in people's way is getting in and out of the market at the wrong time," Johnson says.

Buffett's approach is to be greedy when people are fearful and vice versa, he says. "Us mere mortals have a hard time applying that because we let our emotions get in the way," Johnson adds. "We get in at the high and get out at the low."

In Buffett's letter to shareholders -- known for explaining his company's positions in stocks along with wry but folksy observations on investing and corporate America -- he detailed the varying ways Berkshire progressed in the last year.

"On the operating front, just about everything turned out well for us last year – in certain cases very well," Buffett wrote.

He pointed out that it completed two large acquisitions, spending almost $18 billion to purchase all of NV Energy and taking a major interest in H. J. Heinz, the food giant.

Buffet also said his holding company increased its ownership interest last year in four well-known companies: American Express, Coca-Cola, IBM and Wells Fargo.

Berkshire reported fourth-quarter net income of $4.99 billion, or $3,035 per Class A share, on revenue of $47 billion. That's up 10% from $4.55 billion, or $2,757 per Class A share, on revenue of $44.72 billion last year.

Berkshire's insurance companies, which include Geico and General Reinsurance, reported a $394 million operating profit in the fourth quarter, compared to last year's $19 million loss.

Berkshire's operating earnings, which exclude investments and derivatives, grew to $3.78 billion, or $2,297 per Class A share.

The three analysts surveyed by financial data company FactSet expected quarterly operating earnings of $2,495.42 per Class A share.

Top stock holdings, according to Berkshire's latest regulatory filing, include Wells Fargo, Coca-Cola, American Express and IBM. Rounding out the top 10 holdings are Procter & Gamble, ExxonMobil, Wal-Mart Stores, U.S. Bancorp, DirecTV and DaVita HealthCare Partners.

In the fourth quarter, Berkshire increased its holdings in Wells Fargo, Wal-Mart, U.S. Bancorp and ExxonMobil. There was also a new stake, worth $262.4 million, in Liberty Global, a cable operator.

Berkshire sold its shares in GlaxoSmithKline, the pharmaceutical giant, and DISH Network. And he reduced his stake in Suncor Energy and ConocoPhillips.

In the shareholder letter, Buffett addressed the topic of his own demise.

"On my death, Berkshire's ownership picture will change but not in a disruptive way," he wrote. "None of my stock will have to be sold to take care of the cash bequests I have made or for taxes. Other assets of mine will take care of these requirements."

The Buffett family would not be involved in managing the business, he wrote, but as large shareholders, "will help in picking and overseeing the managers who do."

After he dies, he expects his job to be divided, with one person taking the CEO post and running operations and one or more executives handling the investment side of the business.

Creighton University's Johnson notes that Buffett has hired many capable employees. "There is a talent pool there" that can successfully run the company after Buffett's death, he says.

Berkshire's shares rose more than 13% last year. BRK.B shares gained 13.4% the past 52 weeks and closed up 1% Friday to $115.78. BRK.A shares added 13.7% the past year and rose 1.2% Friday to close at $173,708.