Berkshire Hathaway Profits $ 30 Billion From Investment Portfolio

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Berkshire Hathaway reported an increase in profits for the third quarter, as Warren Buffett’s company began to roll out the billions of dollars it had amassed over the past decades.

The conglomerate which owns insurers such as Geico, fast food chain Dairy Queen and railroad giant BNSF reported an 82% increase in profits from a year ago, to $ 30 billion for quarter, or $ 18,994 for each of the company’s Class A shares.

The profit increase was driven by Berkshire’s investment portfolio, which includes large holdings in Apple, American Express and Bank of America. It swelled by $ 25 billion for the period as the US stock market continued to recover.

A slight increase in profits from its rail, utilities and energy businesses helped offset a net loss in its insurance business that drove operating profit down by one-third to $ 5.5 billion. of dollars.

Berkshire also spent $ 9 billion on share buybacks for the period, setting a new quarterly share buyback record after easily eclipsing the $ 5.1 billion spent in the second quarter. The buybacks did little to change the company’s massive cash flow, which fell slightly from a record high of $ 146.6 billion in the second quarter to $ 145.7 billion.

“We’re happy to see this level of redemption – it was frustrating to watch them build up and increase the stack of cash,” said Jim Shanahan, analyst at Edward Jones. “It had become such a huge number.”

Berkshire bought $ 2.4 billion of its own shares in October, based on a decline in the company’s stock count calculated by Mr Shanahan.

The surge in buybacks could help temper investors worried about falling operating profits, especially in Berkshire’s insurance business, said Cathy Seifert, an analyst who covers the company for CFRA Research.

Berkshire recorded a loss of $ 218 million from insurance underwriting for the quarter, down from a profit of $ 440 million a year ago. Geico’s profits fell by a quarter to $ 276 million as the company – alongside other auto insurers – returned money to customers in the form of “dividends to policyholders” that reflect lower accidents car with fewer drivers on the road during the pandemic.

“Geico’s results are lagging behind some of their leading peers,” said Ms. Seifert. “A number of Geico’s competitors continued to deliver revenue growth and operating profit growth despite these policyholder participations, as their underlying profitability continued to be aided by the fact that people were not driving, so the claims were lower.

Mr Buffett has shown his bargaining good faith remains intact in recent months, having gone years without landing one of the mega-seals he is known for.

Berkshire closed its $ 8 billion takeover of Dominion Energy’s natural gas transportation and storage business in early November. In August, he placed a $ 6 billion bet on Japan’s five largest trading houses, including Mitsubishi Corp and Sumitomo Corp.

The company also invested in the initial public offering of cloud-based database company Snowflake, a bet led by Todd Combs, one of Mr Buffett’s main lieutenants.

However, investors did not reward its sprawling conglomerate. Berkshire shares are down 7.6% so far this year, behind the S&P 500 by more than 18 percentage points. This is one of the company’s worst years against the benchmark since the financial crisis, even though Berkshire is well ahead of the broader insurance industry.

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