Warren Buffett, Chairman and CEO of Berkshire Hathaway.
Andre Harnik | PA
Berkshire Hathaway posted a solid increase in third-quarter operating profits on Saturday despite growing fears of a recession, while Warren Buffett continued to buy back his shares at a modest pace.
The Omaha-based conglomerate’s operating profits – which encompass earnings earned by the myriad of conglomerate-owned businesses like insurance, railroads and utilities – totaled $7.761 billion in the third quarter, up 20% from the prior year period.
Investment insurance revenue was $1.408 billion, down from $1.161 billion a year earlier. Profit from the company’s utilities and energy business was $1.585 billion, down from $1.496 billion year-over-year. Insurance underwriting, however, suffered a loss of $962 million, while railroad profits fell to $1.442 billion from $1.538 billion in 2021.
Berkshire spent $1.05 billion on share buybacks in the quarter, bringing the nine-month total to $5.25 billion. The pace of redemptions matched the $1 billion purchased in the second quarter. Redemptions were well below CFRA’s expectations, as its analyst estimated it would be similar to the $3.2 billion total in the first quarter.
However, Berkshire posted a net loss of $2.69 billion in the third quarter, compared with a gain of $10.34 billion a year earlier. The quarterly loss was largely due to a decline in Berkshire equity investments amid the market roller coaster.
Berkshire suffered a $10.1 billion loss on its investments in the quarter, bringing its 2022 decline to $63.9 billion. The legendary investor again told investors that the amount of investment losses in any given quarter is “generally meaningless.”
Shares of Buffett’s conglomerate have outperformed the broader market this year, with Class A shares falling about 4% from the S&P500down 20%. The stock fell 0.6% in the third quarter.
Buffett continued to buy Occidental Petroleum’s decline in the third quarter as Berkshire’s stake in the oil giant rose to 20.8%. In August, Berkshire received regulatory approval to buy up to 50%, sparking speculation it could eventually buy all of Houston-based Occidental.
The conglomerate amassed cash of nearly $109 billion at the end of September, compared to a total of $105.4 billion at the end of June.