Berkshire Hathaway, the conglomerate led by Warren Buffett, reported a significant increase in third-quarter operating earnings, along with a record amount of cash reserves. The company’s operating earnings reached $10.761 billion, a 40.6% increase compared to the same quarter last year. Berkshire also held a record $157.2 billion in cash at the end of September.
Warren Buffett, known as the “Oracle of Omaha,” has been taking advantage of surging bond yields by investing in short-term Treasury bills yielding at least 5%. The conglomerate now owns $126.4 billion worth of such investments, up from $93 billion at the end of last year.
However, Berkshire’s buyback activity slowed down during the quarter as the company’s shares reached a record high. The company spent $1.1 billion to repurchase shares, bringing the total for the first nine months of the year to approximately $7 billion.
Despite the positive financial results, Berkshire Hathaway’s Class A shares have fallen about 6% from their peak in September. Nevertheless, they have rallied nearly 14% this year.
In addition to the financial update, Berkshire’s insurance empire, including the crown jewel Geico, reported another profitable quarter with underwriting earnings of $1.1 billion. Geico is currently undergoing a turnaround after losing market share to competitor Progressive. On the other hand, BNSF, the company’s railroad division, saw a 15% decline in earnings due to lower volumes and higher costs.
The company did face a significant investment loss of $24.1 billion in the third quarter, primarily driven by a decline in its Apple stake. However, Berkshire advised investors to look beyond the quarterly fluctuations in its equity portfolio, emphasizing that such gains or losses are often misleading.
While Berkshire Hathaway achieved a notable increase in operating earnings, it also acknowledged the negative economic impact of the COVID-19 pandemic, as well as geopolitical risks and inflation pressures. The company stated that the long-term effects of these events cannot be reasonably estimated at this time.
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