Berkshire plagued by losses in its stock holdings
Berkshire Hathaway, the conglomerate led by Warren Buffett, posted its first total quarterly loss in a year on Saturday due to falling prices of Apple and other stocks it owns, even though it said improvements in its insurance business boosted operating profit to a record.
Its broad portfolio of businesses, ranging from insurance to energy to consumer goods such as See’s candies, generally performed better in the third quarter than in the same quarter a year earlier. And Berkshire’s cash holdings rose to a record $157.2 billion in the third quarter, when it sold $5.3 billion more shares than it bought.
Berkshire also slowed its share buybacks, buying back $1.1 billion in the third quarter.
Investors keep a close eye on Berkshire because its results often reflect broader economic trends and because of Mr. Buffett’s reputation as a shrewd investor.
Net loss for the third quarter more than quadrupled to $12.77 billion, compared with about $2.8 billion a year earlier.
The results included $23.5 billion in losses from investments, mainly due to a 12 percent decline in the stock price of Apple, in which Berkshire owned a $157 billion stake as of September 30.
Berkshire’s net results vary widely from quarter to quarter because accounting rules require the company to report investment gains and losses even if it doesn’t buy or sell anything. Mr. Buffett says the resulting volatility is generally meaningless.
Operating profit rose 41 percent to $10.76 billion, compared to $7.65 billion a year earlier.
Its insurance business generated $4.89 billion in profit as Geico’s auto insurer and reinsurance businesses made money after posting losses in 2022, while rising interest rates boosted U.S. Treasury income.
Berkshire also benefited from a relatively quiet Atlantic hurricane season, which reduced catastrophe losses, unlike in 2022, when it lost $2.7 billion from Hurricane Ian.
But revenues at the BNSF freight railroad fell 15.3 percent in the quarter due to lower volumes and higher non-fuel costs. The companies associated with the housing market also saw declines due to rising mortgage rates and fewer existing homes for sale, as well as a drop in demand for mortgage refinancing. Income from real estate brokerage fell by 13.8 percent in the third quarter.
Berkshire also reported that revenues from its apparel and footwear businesses fell 11.2 percent due to a decline in customer demand.
Mr. Buffett, 93, has led Berkshire since 1965. His $117.5 billion fortune ranks fifth worldwide, according to Forbes magazine.
Berkshire shares are up 14 percent this year, matching the return of the S&P 500.