Berkshire Hathaway and a record amount of cash.
Berkshire Hathaway on Saturday reported a big jump in third-quarter operating profit and also a record amount of cash as Warren Buffett saw few opportunities to close deals.
Operating profit for the Omaha-based conglomerate, which includes profits from myriad wholly owned businesses such as insurance, railroads and utilities, reached $10.761 billion last quarter. That's up 40.6% from $7.651 billion in the same quarter a year ago.
At the end of September, Berkshire held a record amount of cash - $157.2 billion - surpassing the high of $149.2 billion set in the third quarter of 2021.
The "Oracle of Omaha" is taking advantage of soaring bond yields, buying short-term Treasury bonds yielding at least 5%. At the end of the third quarter, the conglomerate owned $126.4 billion worth of such investments, up from about $93 billion at the end of last year.
Buyback activity continued to slow as Berkshire's stock climbed to record levels during the quarter. The firm spent $1.1 billion on share repurchases, bringing the nine-month total to approximately $7 billion.
Berkshire's Class A shares are up nearly 14% this year. After hitting an all-time high on Sept. 19, the stock has fallen about 6% from its peak.
Geico, the crown jewel of Berkshire's insurance empire and Buffett's "favorite child," posted another profitable quarter with underwriting gains of $1.1 billion. The auto insurer is in the midst of a turnaround after losing market share to rival Progressive.
BNSF, however, saw a 15% drop in profit 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 stemming from a decline in its large stake in Apple. Shares of the iPhone maker fell 11.7% during the quarter, but have since recovered more than 3%.
As usual, Berkshire Hathaway asked investors to look away from quarterly swings in its stock portfolio.
"The amount of investment gains/losses in a given quarter is typically meaningless and yields net income (loss) per share figures that can be very misleading to investors who have little or no knowledge of accounting rules," the company said in a statement.
Although Berkshire saw 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 operating activities were impacted to varying degrees by government and private sector actions to mitigate the adverse economic impact of the COVID-19 virus and its variants, as well as developments in geopolitical conflicts, supply chain disruptions and government actions to slow inflation," Berkshire said. "The economic impact of these events over the longer term cannot be reasonably estimated at this time."