Buffett Quadruples Third-Quarter Earnings on Investment Gains

OMAHA, Nebr. – Warren Buffett's company more than quadrupled its third-quarter earnings because of a significant gain in the value of its investments, although its insurance and railroad business also improved.

In particular, Buffett bought back nearly $ 1 billion worth of shares during the quarter – the first time in years – a possible sign that the world's most famous investor has not been able to find new stocks. attractive investments.

Berkshire Hathaway Inc. said Saturday it has earned $ 18.54 billion, or $ 7.52 per Class B share. This is up from $ 2.47 billion last year, or 1.65 billion dollars. dollar per share B, when insurance losses due to several hurricanes detracted from results.

Buffett has long claimed that Berkshire's operating profit provides a better view of quarterly performance, as it excludes investments and derivatives, which can vary widely.

According to this measure, Berkshire reported an operating profit of $ 6.88 billion, or about $ 2.79 per Class B share. This represents an increase of $ 3.44 billion, or about 1, $ 40 per share B.

The Omaha-based company's sales reached $ 63.45 billion in the quarter, up from $ 59.5 billion last year. Berkshire Hathaway officials do not generally comment on the company's quarterly results.

"Overall, it's a very good report," said Andy Kilpatrick, a retired stockbroker and author of the title "Permanent Value: Warren Buffett's Story."

Berkshire's insurance division, which includes Geico and a number of large reinsurance companies, recorded a $ 441 million profit in the quarter. That's much better than last year's $ 1.4 billion underwriting loss when hurricanes Harvey, Irma and Maria caused damage and Mexico suffered earthquakes.

The Burlington Northern Santa Fe Railway added $ 1.4 billion to Berkshire's quarterly profits, up from $ 1 billion a year earlier. BNSF transported 5% more freight during the first nine months of the year, a sign that the economy remains strong.

Berkshire's largest quarterly earnings growth came from a $ 11.5 billion gain on the value of its investments. A year ago, Berkshire had only announced a $ 423 million investment gain. The new accounting rules that came into effect this year forced Berkshire to change the way it records the value of its investments.

During the quarter, Berkshire bought back a portion of its own shares for the first time in several years, after easing its restrictions. Buffett spent $ 928 million to redeem 225 Class A shares and 4.1 million Class B shares during the quarter.

Jim Shanahan, an analyst at Edward Jones, said investors would appreciate the fact that Buffett followed the new buyback program and bought shares.

"This will send a strong signal to the stock markets," Shanahan said.

But the fact that Berkshire buys its own shares 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 railways and clothing, furniture and jewelry companies. Its insurance and utilities activities generally account for more than half of the company's net income. The company also has significant investments in companies such as Apple, American Express, Coca-Cola and Wells Fargo & Co.