Berkshire Hathaway, led CEO Warren Buffett, reported a significant increase in third-quarter operating earnings. The conglomerate’s operating earnings, which include profits from its various wholly owned businesses, totaled $10.761 billion, a 40.6% increase compared to the same quarter last year. Additionally, Berkshire held a record level of cash at the end of September, amounting to $157.2 billion, surpassing the previous high of $149.2 billion set in the third quarter of 2021.
Warren Buffett has been taking advantage of rising bond yields investing in short-term Treasury bills that yield at least 5%. Berkshire owned $126.4 billion worth of these investments at the end of the third quarter, compared to around $93 billion at the end of last year. However, buyback activity has slowed down as Berkshire shares reached a record high during the quarter. The company spent $1.1 billion to repurchase shares, bringing the total for the nine-month period to approximately $7 billion.
Despite the positive financial performance, Berkshire Hathaway Class A shares have fallen about 6% from their peak after reaching an all-time high on September 19.
In terms of its subsidiary businesses, Geico, the flagship insurance company of Berkshire Hathaway, reported another profitable quarter with underwriting earnings of $1.1 billion. Geico is currently undergoing a turnaround strategy after losing market share to competitor Progressive. On the other hand, BNSF, the railroad division, faced a 15% decline in earnings due to lower volumes and higher costs.
Notably, Berkshire Hathaway experienced a significant investment loss of $24.1 billion in the third quarter, largely resulting from a decline in its large stake in Apple. Despite this loss, shares of Apple have rebounded more than 3% since then.
Berkshire Hathaway emphasized that investors should look beyond the quarterly fluctuations in its equity portfolio, as the amount of investment gains or losses in any given quarter is often meaningless.
While the company achieved a substantial increase in operating earnings, it acknowledged the negative economic effects of the ongoing pandemic, geopolitical risks, and inflation pressures. Berkshire stated that the long-term economic impact of these events cannot be accurately estimated at this time.