Warren Buffett sits tight on cash as Berskhire investments take a hit: reports
Berkshire Hathaway hit a 41% increase in operating earnings and $157 billion in cash
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Warren Buffett’s Berkshire Hathaway posted $12.8 billion in losses as the company’s portfolio underperformed, underscored by the billionaire’s unwillingness to spend on new investments while sitting on cash to the sum of over $157 billion.
The company’s third-quarter loss dwarfs the one reported in the same period last year, when Berkshire lost $2.8 billion. Despite that significant drop, the company’s portfolio is worth over $341 billion.
Apple, one of the most significant holdings in Berkshire’s portfolio and accounting for nearly half its value, has dropped $25 per share after peaking at around $196.45 per share in July.
However, Buffett has routinely stressed that investors should not worry about investment performance, as value in the stock market can vary wildly. Instead, he argued that they should measure Berkshire's success by its operating earnings, which were up to $10.8 billion — a 41% surge in value, according to The Associated Press.
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Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., speaks during a Bloomberg Television interview in New York on Wednesday, Aug. 30, 2017. Buffett said the rally in markets over the last several years has made it harder (Christopher Goodney/Bloomberg via Getty Images / Getty Images)
Analysts expected Berkshire to report operating earnings of $6,540.23 per Class A share, but instead the company achieved $7,437.15 per Class A share.
The company’s core operations instead draw from insurance companies and other properties acquired over the year, such as Geico, which has rebounded this year after reporting losses in six straight quarters before 2023. This year, the insurance company achieved a $703 million underwriting profit in Q1 2023 and $514 million in Q2 2023, according to Quartz.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| ACGL | ARCH CAPITAL GROUP LTD. | 90.90 | -2.15 | -2.31% |
| BRK.A | BERKSHIRE HATHAWAY INC. | 607,342.49 | -4,217.51 | -0.69% |
| CINF | CINCINNATI FINANCIAL CORP. | 110.88 | -7.56 | -6.38% |
| WRB | W.R. BERKLEY CORP. | 76.66 | -1.25 | -1.60% |
Geico cited higher premiums as a result of increased car prices, and a decrease in both collision claims and its advertising budget as factors driving its change in fortunes, which have helped boost Berkshire in turn.
The other insurance holdings under Berkshire also benefited from a "quiet" Atlantic hurricane season, which meant fewer losses to handle, according to The New York Times.
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FILE PHOTO: Berkshire Hathaway shareholders walk by a video screen at the company's annual meeting in Omaha. (REUTERS/Rick Wilking/File Photo / Reuters Photos)
The company also counts See’s Candies, Dairy Queen, Helzberg Diamonds, Coca-Cola, American Express, Chevron, BNSF railroad and several utilities companies in those core operations. BNSF posted a decrease in profits compared to the same quarter last year, but that still amounted to $1.2 billion.
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Berkshire sold $5.3 billion more stocks than it bought, leading to increased cash waiting for investment. One of those purchases included $1.1 billion of its own stock in the quarter, but that is a decrease, compared to Q1 2023, when it bought back $4.4 billion of its own stock.
Buffett also increased his holdings in Occidental Petroleum, taking just .7% more of the company as shares drifted down over the final weeks of October. Berkshire had already increased its holdings in June, bringing total ownership to over 25% of Occidental.