Berkshire Hathaway, the Omaha-based conglomerate led by Warren Buffett, reported a significant increase in third-quarter operating earnings and a record level of cash on hand. The conglomerate’s operating earnings for the quarter totaled $10.761 billion, a 40.6% increase from the same quarter last year. Berkshire also held a record amount of cash, with $157.2 billion at the end of September.
Buffett, often called the “Oracle of Omaha,” has been taking advantage of surging bond yields by buying up short-term Treasury bills yielding at least 5%. Berkshire’s investments in such bonds totaled $126.4 billion at the end of the third quarter, compared to about $93 billion at the end of last year.
While Berkshire’s share buyback activity slowed down during the quarter, with $1.1 billion spent on repurchasing shares, the company’s Class A shares rallied nearly 14% this year. After reaching an all-time high in September, shares have fallen about 6% from the peak.
Berkshire’s insurance empire, particularly Geico, continued to perform well. Geico reported underwriting earnings of $1.1 billion for the quarter. However, BNSF, the conglomerate’s railroad division, saw a 15% decline in earnings due to lower volumes and higher costs.
Despite the positive earnings, Berkshire did experience a significant investment loss of $24.1 billion in the third quarter, mainly due to a decline in its stake in Apple. However, Berkshire urged investors to look past these fluctuations in its equity portfolio, stating that they are usually meaningless.
Berkshire also acknowledged the negative economic impact of the COVID-19 pandemic, as well as geopolitical risks and inflation pressures. The conglomerate stated that the long-term economic effects of these events could not be reasonably estimated at this time.
Overall, Berkshire Hathaway’s strong operating earnings and significant cash reserves highlight the company’s ability to navigate challenging economic conditions and take advantage of investment opportunities.