Warren Buffett continued to sit on the sidelines while Berkshire Hathaway recorded another double-digit increase in its operating profit as its railroad, utility, and energy businesses rebounded from the pandemic.
According to the conglomerate’s earnings report released on Saturday, operating income in the third quarter reached $6.47 billion, an increase of 18% over $5.48 billion a year ago.
In the second quarter, Berkshire’s cash pile was $144.1 billion but ended September with a record $149.2 billion. Despite record valuations and a competitive environment, Buffett has not made any significant acquisitions in the last few years.
Despite Berkshire’s aggressive share buybacks, the company generated a record amount of cash. Its stock repurchases in the third quarter amounted to $7.6 billion, bringing the nine-month total to $20.2 billion. A record $24.7 billion was invested last year by Berkshire Hathaway
The reopening has resulted in greater demand for Berkshire’s multitude of businesses as pre-pandemic levels of demand are returning. The company’s railroad, utilities, and energy segments generated operating earnings of $3.03 billion in the third quarter, up 11% from the same quarter last year.
Berkshire stated in the report that many of its businesses experienced significant sales and earnings increases beginning in the third quarter of 2020, reflecting higher customer demand. It is not possible to estimate the long-term effects at this time.”
Berkshire Hathaway’s overall earnings for the third quarter fell by more than 60% year-over-year, reflecting its fluctuating equity investments. As compared to a $24.8 billion gain a year ago, Berkshire’s equity investments made only $3.8 billion last quarter.
Buffett advised investors not to focus too much on quarterly changes in investment gains or losses.
In its quarterly report, the conglomerate noted that investment gains and losses are typically meaningless, resulting in earnings per share figures that are misleading to investors who do not understand accounting rules.
This year, Berkshire’s B shares have gained more than 24%, but are only 2% below their record high of May.