Berkshire Hathaway posts a 40% jump in operating earnings, cash pile swells to a record $157 billion

On Saturday, Berkshire Hathaway announced its third-quarter operating earnings, revealing an impressive surge in profitability. Warren Buffett, often referred to as the “Oracle of Omaha,” found himself in a situation where the conglomerate was sitting on a substantial record amount of cash. This was primarily due to the limited availability of attractive dealmaking opportunities in the current market.

Berkshire Hathaway, headquartered in Omaha, Nebraska, derives its operating earnings from a diverse portfolio of wholly owned businesses, ranging from insurance to railroads and utilities. In the last quarter, the company reported operating earnings of $10.761 billion, a remarkable 40.6% increase compared to the $7.651 billion earned in the same quarter the previous year.

The most noteworthy observation in Berkshire’s financial report was its record-breaking cash reserve, which stood at an astounding $157.2 billion as of the end of September. This figure exceeded the previous high of $149.2 billion that the conglomerate had reached in the third quarter of 2021.

Warren Buffett’s investment strategy has adapted to the changing financial landscape. In response to the surge in bond yields, Berkshire Hathaway allocated a significant portion of its capital to the purchase of short-term Treasury bills with yields of at least 5%. By the close of the third quarter, the conglomerate held investments in these bills amounting to $126.4 billion, a substantial increase from the approximately $93 billion held at the end of the previous year.

During this quarter, Berkshire Hathaway’s buyback activity decelerated, coinciding with a surge in the company’s stock price to a record high. In total, the firm spent $1.1 billion to repurchase its own shares, bringing the nine-month cumulative repurchase to approximately $7 billion.

Berkshire Hathaway’s Class A shares have shown strong performance throughout the year, rallying nearly 14%. Following an all-time high on September 19th, the shares experienced a slight decline of approximately 6% from their peak. This performance reflects the dynamic nature of the company’s investment and financial strategies, which continue to evolve under the guidance of Warren Buffett.