- The Omaha-based conglomerate’s operating profits totaled $10.761 billion in the most recent quarter, up 40.6% from the year-ago quarter.
- Berkshire had a record cash balance at the end of September – $157.2 billion.
- The “Oracle of Omaha” has taken advantage of rising bond yields and purchased short-term Treasury bonds yielding at least 5%.
- Geico, the crown jewel of Berkshire’s insurance empire, reported another profitable quarter.
An Andy Warhol-like print of Berkshire Hathaway CEO Warren Buffett hangs in front of a clothing stand during Berkshire Hathaway Inc.’s first in-person annual meeting since 2019 in Omaha, Nebraska, U.S., April 30, 2022.
Scott Morgan | Portal
Berkshire Hathaway on Saturday reported a big jump in third-quarter operating profits while also having a record amount of cash as Warren Buffett saw few business opportunities.
The Omaha-based conglomerate’s operating profits — which include profits from its myriad wholly-owned companies such as insurance, railroads and utilities — totaled $10.761 billion last quarter. That’s 40.6% more than the $7.651 billion earned in the year-ago quarter.
Berkshire had a record cash balance at the end of September – $157.2 billion – surpassing the high of $149.2 billion set in the third quarter of 2021.
The “Oracle of Omaha” has taken advantage of rising bond yields and purchased short-term Treasury bonds yielding at least 5%. The group had $126.4 billion worth of such investments at the end of the third quarter, compared with about $93 billion at the end of last year.
Buyback activity continued to slow as Berkshire shares hit a record high during the quarter. The company spent $1.1 billion on share repurchases, bringing the total value for the nine months to about $7 billion.
Berkshire Class A shares have gained nearly 14% this year. After hitting an all-time high on September 19, shares fell about 6% from the peak.
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Berkshire Hathaway Class A Shares
Geico, the crown jewel of Berkshire’s insurance empire and Buffett’s “favorite child,” reported another profitable quarter with an underwriting profit of $1.1 billion. The auto insurer is in the midst of a turnaround after losing market share to rival Progressive.
However, BNSF posted a 15% drop in profits as its rail division struggled with lower volumes and higher costs.
Investment loss
Buffett’s company posted a significant investment loss of $24.1 billion in the third quarter, largely due to the decline of his large Apple stake. Shares of the iPhone maker fell 11.7% in the quarter but have since recovered over 3%.
As usual, Berkshire Hathaway urged investors to look beyond the quarterly fluctuations in Berkshire’s stock portfolio.
“The amount of investment gains/losses in a given quarter is typically meaningless and provides net gains (losses) per share figures that can be extremely misleading to investors who have little or no knowledge of accounting standards,” the company said in a statement.
While Berkshire achieved a significant increase in operating profit, the conglomerate acknowledged the negative economic impact of the pandemic as well as geopolitical risks and inflationary pressures.
“Our operations have been impacted to varying degrees by government and private sector actions to mitigate the negative economic impact of the COVID-19 virus and its variants, as well as evolving geopolitical conflicts, supply chain disruptions and government actions to slow inflation said Berkshire. “The long-term economic impact of these events cannot be reasonably estimated at this time.”