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Berkshire profits climb to record as Buffett's Cash Pile grows



(Bloomberg) – Berkshire Hathaway Inc. reported operating profit jumping 14% to a record high when Warren Buffett's conglomerate gained profits on its diversified operations.

Investment gains from the company's insurance companies and an increase in earnings from the company's railroad helped bring operating profit to $ 7.86 billion in the third quarter, up from $ 6.88 billion the year before.

Key Insights

Berkshire reported a $ 128 billion cash pile, pushing past the record set in the second quarter. Buffett's mountain of cash has grown as he struggles to find major acquisitions to juice Berkshire's return. Buett snapped up around $ 700 million of Berkshire Hathaway stock in the third quarter. He has long preferred to spend some of his cash on buying companies or ordinary shares in other businesses. But as high valuations stiffened acquisitions, buybacks have become more common. Berkshire's shares are on track for their worst underperformance since 2009. The company's A shares gained 5.7% this year through Friday's close, short of a 22% rise in the S&P 500 index during that time.

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Net earnings fell 11% to $ 16.5 billion. Under new accounting rules, Berkshire must report fluctuations in its investment portfolio in its net income figures. The unrealized gains during the third quarter were approximately $ 8 billion, compared with a gain of $ 10.2 billion in the same period last year. Berker also reaped $ 513 million of realized gains on the sale of investments during the third quarter. This was down from $ 995 million in realized gains the company reported a year earlier. Berkshire's press release is here.

To contact the reporter about this story: Katherine Chiglinsky in New York at kchiglinsky@bloomberg.net

To contact the editor responsible for this story: Michael J. Moore at mmoore55@bloomberg.net

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