Even while having a record amount of cash on hand, Berkshire Hathaway reported a sharp increase in operating profitability for the third quarter, as Warren Buffett saw few chances for deals.

Operating earnings for the Omaha-based conglomerate, which include income from its numerous fully owned companies like utilities, railroads, and insurance, came to $10.761 billion in the most recent quarter. Compared to the $7.651 billion made in the same quarter last year, that represents a 40.6% increase.

At the end of September, Berkshire’s cash holdings reached a record $157.2 billion, surpassing the peak of $149.2 billion recorded in the third quarter of 2021.

The “Oracle of Omaha” has been purchasing short-term Treasury notes yielding at least 5%, profiting from rising bond yields.

At the conclusion of the third quarter, the conglomerate controlled interests worth $126.4 billion, up from approximately $93 billion at the end of the previous year.

During the quarter, Berkshire shares surged to a record high, while buyback activities slowed significantly. After the company repurchased shares for $1.1 billion, the total amount spent over the course of nine months was almost $7 billion.

This year, Berkshire Class A shares have increased by almost 14%. Following an all-time high on September 19, shares have decreased by almost 6%.

Geico, the jewel in the Berkshire family’s insurance empire and Buffett’s “favourite child,” posted $1.1 billion in underwriting earnings for another successful quarter. The auto insurance, which lost market share to rival Progressive, is currently undergoing a turnaround.

However, as the railway division struggled with fewer volumes and increased expenses, BNSF witnessed a 15% fall in profitability.

In the third quarter, Buffett’s company reported a hefty loss on investments of $24.1 billion, primarily due to a fall in its large Apple position. The creator of iPhones’ stock dropped 11.7% during the quarter, although it has since increased by more than 3%.

As is customary, Berkshire Hathaway requested that investors ignore the quarterly swings in the company’s equity holdings.

“The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings (losses) per share that can be extremely misleading to investors who have little or no knowledge of accounting rules,” the company said in a statement.

Even though Berkshire’s operating profitability increased significantly, the company acknowledged the pandemic’s detrimental effects on the economy, as well as geopolitical threats and inflation pressures.

“To varying degrees, our operating businesses have been impacted by government and private sector actions to mitigate the adverse economic effects of the COVID-19 virus and its variants as well as by the development of geopolitical conflicts, supply chain disruptions and government actions to slow inflation,” Berkshire said. “The economic effects from these events over longer terms cannot be reasonably estimated at this time.”

(Adapted from CNN.com)

Categories: Economy & Finance, Entrepreneurship, Geopolitics, Regulations & Legal, Strategy, Uncategorized