Berkshire Hathaway’s operating profit rose 20% in the third quarter, and the bear market took its toll on investments.Warren Buffett’s Berkshire Hathaway (BRKB) Cash reserves rose as buybacks remained relatively modest.
Warren Buffett further loads western oil (OXY) this quarter.
Buffett Berkshire’s income and earnings come from various operating companies and equity investments.
Operating profit — Buffett’s preferred measure of performance — rose 20% in the third quarter from a year earlier. The same period last year was $7.76 billion. That’s vs. The second quarter rose 39% to $9.28 billion.
Berkshire appears to be beating operating EPS estimates. Analysts polled by FactSet expected Berkshire’s earnings of $2.81, down 2.3% from a year earlier. a year ago.
Berkshire lost $962 million in insurance underwriting in the third quarter, likely reflecting some of the impact of Hurricane Ian, which hit Florida in late September. But insurance investment income rose to $1.41 billion.
Railroad revenue fell 6% from last year. a year ago.
Berkshire Hathaway posted a net loss of $2.69 billion in the third quarter, reflecting a $10.45 billion loss on investments during the bear market. In the second quarter, Berkshire posted a $53 billion investment loss.
Berkshire’s stock portfolio includes a huge stake in the iPhone maker apple (AAPL) except for a large and growing OXY stock. During the third quarter, he continued to acquire more stakes in Occidental, bringing his stake in the oil and gas producer to nearly 21% by the end of September. This comes after Buffett’s Berkshire Hathaway bought nearly 6 million shares of OXY stock in the first quarter and nearly 121 million shares. Chevron (CVX) shares surged on the back of a surge in oil prices after the first purchase of CVX stock near the end of 2020. While Apple and Occidental closed slightly higher, stocks as a whole ended the third quarter volatile.
BRKB stock, Warren Buffett stock holding
Berksire Hathaway’s Class B shares rose 1.3 percent to 287.46 in stock market trading on Friday. BRKB has been consolidating since March.
On October 4th, BRKB shares gapped after news that Buffett’s successor Greg Abel had purchased $68 million worth of shares, a sharp rise from his previous stake of less than $3 million.
Apple shares fell 0.4% on Friday, having fallen sharply for the week. Occidental shares rose 1.5%. CVX rose 1.3%. Several top energy stocks can be found on the IBD Rankings and the IBD 50 Top Growth Stocks list as the oil patch is doing well in the current market.
Berkshire Hathaway repurchases
Berkshire Hathaway repurchased $1.05 billion in stock in the third quarter, and about $1 billion in stock repurchases in the second quarter. That slowed the pace in the first quarter, when the group repurchased $3.2 billion of its own stock.
Berkshire Hathaway had about $109 billion in cash as of September. 30. At the end of the second quarter, the cash balance was $105.4 billion. Until recently, the cash contribution to Berkshire’s earnings has been lackluster. But Edward Jones analyst James Shanahan said rising interest rates are helping Berkshire’s cash balance make a decent return again.
Shanahan expects higher interest rates and investment activity, including the Oct. 19 acquisition of insurer Alleghany, to boost Berkshire’s earnings. He also predicted more share buybacks at Berkshire, which could help drive earnings growth.
“BRK stock trades at about 1.25 times our estimated book value at the end of 2022, below the five-year average of nearly 1.4 times,” the analyst said on a 19th note in October.
In July 2018, Berkshire eased its share repurchase policy, which is linked to book value per share, or assets minus liabilities. This comes after Buffett is under pressure to deploy more cash.
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