Berkshire Hathaway posts 40% surge in operating earnings and record cash

New York (CNN) — Warren Buffett’s Berkshire Hathaway on Saturday reported a surge in third-quarter operating earnings and a record-high cash pile of $157 billion.

Operating income totaled $10.8 billion, up from $7.7 billion, or a 40.6% increase from a year ago.

Berkshire reported a net loss of $12.8 billion, compared to a loss of $2.8 billion during the same period last year.

The Omaha, Nebraska-based conglomerate saw investment losses of $23.5 billion last quarter, compared to a loss of $10.4 billion a year earlier.

Berkshire’s insurance underwriting business generated earnings of $2.4 billion, up from a loss of $1.1 billion during the same quarter last year. Insurance investment income increased to $2.5 billion, up from $1.4 billion from the same period a year ago.

Geico, owned by Berkshire and one of the country’s largest insurance companies, reported an underwriting profit of $1.053 billion — a sharp gain from a loss of $759 million during last year’s third quarter.

Berkshire bought back about $1.1 billion in stock during the third quarter, bringing the nine-month total to approximately $7 billion in stock repurchases so far this year.

The company’s cash hoard rose to $157.2 billion, up from $147.4 in the second quarter of this year.

Buffett earlier this year brushed off Fitch Ratings’ downgrade of US credit from the top AAA grade to AA+, telling CNBC on August 3 that Berkshire bought $10 billion worth of US Treasuries that week after doing the same a week prior.

“The only question for next Monday is whether we will buy $10 billion in 3-month or 6-month [Treasury notes],” Buffett said at the time.

Treasury yields topped levels not seen in over a decade in October, before retreating last week after the Federal Reserve held rates steady for a second consecutive time.

US stocks have rallied this year on artificial intelligence hype and hopes that the Fed will soon stop hiking interest rates, helping Berkshire’s turnaround from last year’s rout when the market nosedived.

The company’s bets abroad have also paid off. Berkshire revealed in 2020 that it had bought stakes of about 5% in each of Japan’s top five trading companies, totaling $6.7 billion in investments at the time.

The company doubled down this year, taking its stakes in each company to average above 8.5%, as Japan’s stock market soared to 33-year highs.

“It was like having God just opening a chest and just pouring money into it,” Charlie Munger, vice chair of Berkshire Hathaway, said of the investments in an interview with the Acquired podcast released in October.

Berkshire Hathaway Class A shares are up 13.9% for the year as of Friday’s close, underperforming the benchmark S&P 500.

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