An Andy Warhol-like print of Berkshire Hathaway CEO Warren Buffett hangs outdoors a clothes stand throughout the first in-person annual assembly since 2019 of Berkshire Hathaway Inc in Omaha, Nebraska, U.S. April 30, 2022.
Scott Morgan | Reuters
Berkshire Hathaway on Saturday reported a giant bounce in third-quarter working earnings, whereas sitting on a document amount of money as Warren Buffett noticed few dealmaking alternatives.
The Omaha-based conglomerate’s working earnings — which embody income produced from the myriad of wholly owned companies similar to insurance coverage, railroads and utilities — totaled $10.761 billion final quarter. That is 40.6% greater than the $7.651 billion earned from the identical quarter a yr in the past.
Berkshire held a document degree of money on the finish of September — $157.2 billion — topping the $149.2 billion excessive set within the third quarter of 2021.
The “Oracle of Omaha” has been benefiting from surging bond yields, shopping for up short-term Treasury payments yielding at the least 5%. The conglomerate owned $126.4 billion price of such investments on the finish of the third quarter, in comparison with about $93 billion on the finish of final yr.
Buyback exercise continued to decelerate as Berkshire shares roared to a document excessive throughout the quarter. The agency spent $1.1 billion to repurchase shares, bringing the nine-month complete to roughly $7 billion.
Berkshire Class A shares have rallied almost 14% this yr. After reaching an all-time excessive on Sept. 19, shares have fallen about 6% from the height.
Geico, the crown jewel of Berkshire’s insurance coverage empire and Buffett’s “favourite baby,” reported one other worthwhile quarter with underwriting earnings of $1.1 billion. The auto insurer is in the midst of a turnaround after shedding market share to competitor Progressive.
BNSF, nonetheless, noticed a 15% decline in earnings because the railroad division grappled with decrease volumes and better prices.
Funding loss
Buffett’s firm did put up a major funding lack of $24.1 billion within the third quarter, which largely got here from a decline in its large Apple stake. Shares of the iPhone maker fell 11.7% throughout the quarter however have rebounded over 3% since.
As per normal, Berkshire Hathaway requested traders to look previous the quarterly fluctuations in Berkshire’s fairness portfolio.
“The quantity of funding positive aspects/losses in any given quarter is normally meaningless and delivers figures for internet earnings (losses) per share that may be extraordinarily deceptive to traders who’ve little or no information of accounting guidelines,” the corporate mentioned in a press release.
Whereas Berkshire scored a large improve in working earnings, the conglomerate did acknowledge the detrimental financial influence from the pandemic, in addition to geopolitical dangers and inflation pressures.
“To various levels, our working companies have been impacted by authorities and personal sector actions to mitigate the opposed financial results of the COVID-19 virus and its variants in addition to by the event of geopolitical conflicts, provide chain disruptions and authorities actions to gradual inflation,” Berkshire mentioned. “The financial results from these occasions over longer phrases can’t be moderately estimated right now.”
