Profit plummets at Buffett’s company on investment gains

OMAHA, Neb. (AP) — Warren Buffett’s company reported a third-quarter profit that was roughly one-third the amount of last year’s because of much smaller paper gains on the value of its investments, but most of its businesses continue to recover from the effects of the pandemic.

Berkshire Hathaway Inc. reported $10.3 billion net income, or $6,882 per Class A share, in the third quarter. A year ago, it reported $30.1 billion, or $18,994 per Class A share, when it recorded a $24.8 billion paper gain on its investments. This year, Berkshire recorded only a $3.8 billion paper gain on its investments.

Buffett has long said Berkshire’s operating earnings offer a better view of quarterly performance because they exclude investments and derivatives, which can vary widely. By that measure, Berkshire’s operating earnings grew by 18% to $6.47 billion, or $4,330.60 per Class A share, up from $5.48 billion, or $3,452.45 per Class A share, last year.

The four analysts surveyed by FactSet expected Berkshire to report operating earnings of $4,536.17 per Class A share.

Most of Berkshire’s eclectic assortment of more than 90 businesses — which includes BNSF railroad, several major utilities, a number of manufacturers as well as furniture, jewelry and chocolate businesses — reported improved earnings this year.

But its insurance businesses recoded a $784 million loss in the third quarter because of $1.7 billion in claims related to catastrophes including Hurricane Ida.

Berkshire’s cash crept up to $149.2 billion during the quarter even though Buffett used $7.6 billion to repurchase the company’s shares. Buffett has struggled to find major acquisitions for the company in the past several years, so cash has continued to pile up.

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