Warren Buffett’s Berkshire Hathaway rewrote the record for quarterly operating profit, but the investment portfolio suffered significantly due to the fall in Apple shares, on which the star investor makes his main bet. This follows from the form 10-Qcontaining data for the third quarter of 2023.
At the end of the quarter, the operating profit of the investment company amounted to $10.761 billion – this is a record value in the entire history of Berkshire. The previous maximum was reached in the second quarter of 2023 and amounted to $10.04 billion. The year-on-year growth rate was 40.6%.
The bulk of the increase came from the insurance business, including both insurance and investment profits. Profit from insurance amounted to $2.42 billion against the background of a loss a year earlier in the amount of $1.07 billion, and profit from investments in this segment reached $2.47 billion, adding 75.4% year-on-year. Bloomberg agency explains Such dynamics are due to the fact that in the third quarter of 2022 the insurance business “suffered from catastrophes.” The railroad segment declined 15.3% to $1.22 billion due to lower traffic volumes and higher non-fuel operating costs.
Another record is associated with the size of the cash cushion, that is, the free cash in the accounts of the conglomerate – $157.2 billion. The previous record for this indicator was set in the third quarter of 2021, reminds CNBC. In recent years, the conglomerate has faced a serious problem – excess cash with no worthy uses for the money, given the high market valuations of possible companies to acquire.
Buyback activity has slowed as shares hit an all-time high in the third quarter. Buffett bought back only $1.1 billion from the market. For comparison, in the first quarter this figure was $4.4 billion, and in the second – $1.4 billion.
Berkshire Hathaway Class A shares reached a historical record on September 19 – $566.57 thousand per share. Since the beginning of 2023, securities have grown by almost 14%. How notes Bloomberg, investors see them as protection against worsening economic conditions, which is possible due to a diversified set of businesses in the portfolio.
Quarterly net loss, which was formed by adding operating profit and profit on transactions on the stock market, increased year-over-year from $2.79 billion to $12.76 billion. Buffett has repeatedly reminded shareholders that “analysis of profits or losses derived from investing activities in a single quarter is usually not meaningful.”
Losses from investments at the end of the quarter amounted to $23.53 billion compared to $10.45 billion a year earlier. As of September 30, 78% of Buffett’s investment portfolio was in five companies:
A quarter earlier, the value of the Apple package was $177.6 billion. Thus, Apple’s contribution to the total losses is equal to $20.8 billion (88.4% of the total loss). According to WhaleWisdom, a service that tracks transactions of large American funds, Apple’s share in Buffett’s portfolio amounted to 51% as of June 30. Shares of the iPhone maker fell 11.73% during the quarter to $171.21.
2023-11-04 16:26:00
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