Berkshire Hathaway’s cash position soared to $381.7 billion in the third quarter, a new record, and operating profits rose 34% at CEO Warren Buffett‘s conglomerate.
That amount reached $13.5 billion, with the company’s insurance underwriting profit more than tripling in a period marked by unusually low disaster activity, according to documents released Saturday.
Earlier this year, Buffett appeared to be back on the hunt for deals, with the acquisition of a $1.6 billion stake in UnitedHealth Group Inc. and a $9.7 billion deal to buy OxyChem last month. But the famous billionaire remained on the sidelines of the market in the third quarter. Berkshire Hathaway sold $6.1 billion worth of shares during the period.
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Despite growing cash, the company’s net investment income fell 13% to $3.2 billion amid falling short-term interest rates.
Read more: End of an era: successor will sign Berkshire’s next charter in Buffett’s place
The company’s core insurance and reinsurance business reported pretax operating profit this quarter, after posting losses in the same period a year ago.
However, pretax operating profit at Geico, an auto insurer owned by the Berkshire Hathaway group, fell 13% due to a slight increase in claims and a 40% increase in underwriting costs, which the company attributed to “increased expenses related to purchasing policies.”
Berkshire’s results are closely watched because the conglomerate’s suite of businesses — ranging from insurance to railroads, energy and manufacturing — offer a snapshot of the health of the U.S. economy.
Investors may also pay more attention as the company moves into a new era, with Buffett handing over the CEO role to Greg Abel at the end of the year.
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Operating profit at BNSF, its rail unit, rose 5% to $1.4 billion, driven by growth in revenue from transporting agricultural and energy products, in part due to a slight increase in grain exports. At the same time, Berkshire’s utilities division, which manages PacifiCorp, MidAmerican and NV Energy, reported a 9% drop in operating profit to $1.5 billion in the same period.
No buybacks
For the fifth consecutive quarter, the company chose not to repurchase its own shares, which have fallen nearly 12% since Buffett’s announcement in May that he would step down.
“I think this sends a very strong message to shareholders,” said CFRA Research analyst Cathy Seifert. “If they’re not buying back their shares, why should you?”
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Despite the increase in profits, the company’s timid revenue growth in the period will not improve investor sentiment, according to Seifert.
“I’m having a hard time finding a catalyst” for a share price rise, she said.
