Berkshire Hathaway, Warren Buffett’s investment group, is taking advantage of the rise in interest rates. Given the lack of attractive investment opportunities, the group has built up a liquidity position of just over $157 billion (around 146,500 million euros), according to its latest quarterly report, which the company published on Saturday. The majority of this money is invested in US government bonds.
In its balance sheet, the company reports that as of September 30, it had $126,401 million in short-term government bonds, $25,573 million in cash and equivalents in the insurance division and another $5,267 million in the divisions Railways, Energy and Services. A total of 157,241 million, a record in Berkshire Hathaway’s history. The company doesn’t separate interest from other financial income, but the item that combines them has skyrocketed because of the rate hike.
At the end of the quarter, the company, which is headed by Warren Buffett at the age of 93, had an investment portfolio in stocks of $318,621 million, with latent capital gains of $207,307 million. Five stocks make up 78% of the portfolio: Apple with 156.8 billion; Bank of America with 28,300; American Express with 22,600; Coca-Cola with 22,400 and Chevron with 18.6 billion. Beyond changes in portfolio value, Buffett continued to make net disposals.
Berkshire Hathaway suffered accounting losses of $ 12,767 million in the quarter, mainly due to the decline in the stock market during this period in Apple shares, its main investment, which was worth 156.8 billion at the end of the quarter had US dollars. The company emphasizes in its findings that accounting standards require these changes in value to be recognized in the income statement, even if it is a stable investment and reduces its value: “The amount of gains/losses on investments in a given quarter .” is often irrelevant and provides net income (loss) per share figures that can be very misleading to investors with little or no knowledge of accounting standards,” he notes.
For this reason, the company prefers to focus on developing its business. Operating income improved 40.6% to $10,761 million in the third quarter. The cumulative amount for the first nine months of the year is $28,869 million, 19% more than the same period last year. Much of the improvement is due to the recovery of the insurance business, which suffered losses of $1,072 million in the third quarter of 2022 due to the accumulation of catastrophes and has now contributed $2,422 million to operating income.
The company committed about $1.1 billion to repurchase its own shares, bringing the total for the first nine months of the year to $7 billion.
Shares of Berkshire Hathaway are up nearly 14% in the stock market so far this year. The company has a stock market valuation of around $770 billion.
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