Berkshire Hathaway Inc., led by Warren Buffett, currently has a record amount of cash to invest.
The famed company’s cash hoard topped $149.2 billion in the third quarter, exceeding a previous high established in early 2020, according to the company’s latest earnings announcement. The new high came despite Buffett pouring more money into stock repurchases, with $7.6 billion in repurchases in the quarter, the third-highest total since the board modified its buyback strategy in 2018.
Buffett has struggled with riches of plenty, and not enough chances to put that to work in higher-returning assets. With no major deals in recent quarters, Berkshire’s chief executive officer has frequently turned to buybacks as one way to deploy the cash deluge. But even the heightened level of buybacks during the third quarter wasn’t enough to keep Berkshire’s coffers from swelling.
The company profited as several of its diverse companies recovered from the pandemic’s early stages, helping to improve operating profit by 18 percent in the third quarter. Even as the industry faced supply chain difficulties, Berkshire’s railroad achieved record profitability, while the company’s energy companies posted their greatest profit since records dating back to mid-2009.
Buffett’s company was helped by strong consumer demand for products, but warned in its report that “several of our businesses experienced higher materials, freight and other input costs attributable to ongoing disruptions in global supply chains.” Its collection of manufacturing, servicing and retailing operations posted the third-highest level of profit in data going back to the middle of 2009, an increase of 15% compared to the year-ago period.
This strength helped Berkshire’s insurers make up for a bad quarter. During the third quarter, that group’s underwriting loss increased to $784 million, with losses in underwriting reported by all three of its primary insurance groups. During that time, disaster losses reached $1.7 billion after taxes, including the devastation caused by Hurricane Ida. Meanwhile, Geico is feeling the heat as more people get behind the wheel, resulting in a spike in the number of claims. The severity of claims is also increasing at the same time that used automobile prices are rising.
In the third quarter, Berkshire Hathaway’s net income dropped 66 percent to $10.3 billion, compared to the same period a year before. That figure includes swings in the conglomerate’s nearly $311 billion stock portfolio. The business’s Class A shares were down just slightly, a 1.7% decrease, during those three months ended September 30.