Berkshire Hathaway announced a substantial rise in third-quarter operating earnings on Saturday, even as Warren Buffett found few opportunities for deals and maintained a record amount of cash.
In the last quarter, the conglomerate, based in Omaha, reported operating earnings of $10.761 billion, which includes profits generated by its numerous wholly owned businesses like insurance, railroads, and utilities. This figure represents a 40.6% increase from the $7.651 billion earned in the same quarter the previous year.
At the end of September, Berkshire held an all-time high of cash, totaling $157.2 billion, surpassing the previous high of $149.2 billion set in the third quarter of 2021.
Warren Buffett, often referred to as the "Oracle of Omaha," capitalized on rising bond yields by investing in short-term Treasury bills with yields of at least 5%. By the end of the third quarter, the conglomerate had invested approximately $126.4 billion in such holdings, compared to around $93 billion at the end of the previous year.
The company's share buyback activity slowed down as Berkshire shares reached a record high during the quarter. Approximately $1.1 billion was spent on repurchasing shares, bringing the nine-month total to around $7 billion.
Berkshire Class A shares have seen an almost 14% increase in value this year. Although they reached an all-time high on September 19, they have since dropped about 6% from that peak.
Geico, the flagship of Berkshire's insurance empire and often referred to as Buffett's "favorite child," reported another profitable quarter, with underwriting earnings of $1.1 billion. The auto insurer is in the midst of a turnaround effort after losing market share to the competitor Progressive.
On the other hand, BNSF, the railroad division, experienced a 15% decline in earnings due to lower volumes and increased costs.
Berkshire Hathaway did report a significant investment loss of $24.1 billion in the third quarter, primarily due to a decline in its significant stake in Apple. During the quarter, Apple's shares fell by 11.7%, but they have since rebounded by over 3%.
As is customary, Berkshire Hathaway advised investors to look beyond the quarterly fluctuations in its equity portfolio, as these fluctuations may be misleading.
The company acknowledged the negative economic impact of the pandemic, as well as geopolitical risks and inflation pressures. It stated that its operating businesses have been affected to varying degrees by government and private sector actions to counteract the economic effects of the COVID-19 virus and geopolitical conflicts, as well as supply chain disruptions and measures to combat inflation. However, it noted that the long-term economic effects of these events cannot be accurately estimated at this time.
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