Buffet's fixed quadrupled 3Q profit on investment gains
OMAHA, Neb. – Warren Buffet's company more than quadrupled earnings in the third quarter due to a major paper surplus in the value of its investments, although insurance and rail companies also improved.
Buffet's company bought nearly $ 1 billion in stock during the quarter – the first time it happened this year – a possible sign that the world's most famous investor could not find attractive investments to buy.
Berkshire Hathaway Inc. said on Saturday that it achieved $ 18.54 billion, or $ 7.52 per class B share. It's up from last year's $ 2.47 billion, or $ 1.65 per B-share, as insurance loss from several hurricanes hurt.
Buffett has long said that Berkshire's operating profit gives a better picture of the quarterly results because they exclude investments and derivatives, which can vary widely.
Berkshire reported operating profit of $ 6.88 billion, or about $ 2.79 per class B share. It's up from $ 3.44 billion, or about $ 1[ads1].40 per B share.
The Omaha-based company's revenue grew to $ 63.45 billion in the quarter, up from $ 59.5 billion last year. Berkshire Hathaway officials do not usually respond to the company's quarterly earnings.
"All in all, it's a very strong report," said Andy Kilpatrick, a retired stock broker and author who wrote "Of Permanent Value: Warren Buffett's History."
Berkshire's insurance unit, which includes Geico and several major reinsurance companies, reported a $ 441 million earnings in the quarter. It is much better than last year's loss of $ 1.4 billion when Hurricanes Harvey, Irma and Maria caused destruction and Mexico endured earthquakes.
The Burlington Northern Santa Fe railroad supplied $ 1.4 billion to Berkshire's quarterly earnings, up from $ 1 billion a year ago. BNSF has deducted 5 percent more freight in the first nine months of the year, indicating that the economy is still strong.
The biggest turn in Berkshire's quarterly earnings came from a value of $ 11.5 billion in the value of its investments. A year ago, Berkshire reported only a gain of $ 423 million. New accounting rules that came into force this year, Berkshire forced to change the way it records the value of its investments.
During the quarter, Berkshire repurchased some of its own shares for the first time for several years after solving its restrictions on the exercise. Buffett spent $ 928 million to repurchase 225 A shares and 4.1 million B shares in the quarter.
Jim Shanahan, analyst from Edward Jones, said investors would appreciate Buffett following through the new buyback program and buying shares.
"This will send a strong signal in the stock markets," said Shanahan.
But the fact that Berkshire buys its own stock while holding more than $ 100 billion in cash and short-term investments is a reminder that Buffett has not been able to find other major acquisitions and investments at attractive prices recently.
Berkshire Hathaway Inc. owns more than 90 companies including rail and clothing, furniture and jewelry businesses. Its insurance and utilization business usually accounts for more than half of the company's net income. The company also has major investments in such companies as Apple, American Express, Coca-Cola and Wells Fargo & Co.
