By
Tokoni Uti
December 4th, 2023
As the company valuations have been soaring record high levels, Berkshire’s cash pile has reached the roof. However, the company’s equity investments have dropped by a record 60% year-over-year.
American multinational conglomerate Berkshire Hathaway (NYSE: BRK.A) registered double-digit growth in its operating profits for the third quarter (Q3) of 2021. This comes amid a solid rebound in the utilities, railroad, and energy businesses from their lows in the pandemic.
On the other hand, Berkshire Hathaway chief Warren Buffett is currently sitting on a record pile of cash. As of the latest news, Buffett’s cash pile has surged to a record high of $149 billion. For the third quarter, Berkshire Hathaway reported a net income of $6.47 billion, 18% up from the same quarter last year.
In its report, Berkshire Hathaway said that its range of businesses has been benefitting from the economic reopening. This also happens as the demand has surged to pre-pandemic levels. In the report to investors, Berkshire wrote:
“Beginning in the third quarter of 2020, many of our businesses experienced significantly higher sales and earnings relative to the second quarter, reflecting higher customer demand. The extent of the effects over longer terms cannot be reasonably estimated at this time.”
Berkshire Hathaway’s Cash Pile Reaches Record High in Q3
By the end of September, Berkshire’s cash pile also touched record high levels of $149.2 billion. This is up from the company’s cash pile of $144 billion during the second quarter. This happens as Buffett has paused his acquisition spree as company valuations have been hitting the roof. Furthermore, the deal-making environment has turned competitive than ever before.
Interestingly, this record amount of cash pile comes despite Berkshire’s aggressive share buybacks. During the third quarter, the American conglomerate repurchased a staggering $7.6 billion of its own stock. So, for the nine-month total up to September, Berkshire has accumulated $20.2 billion of its own stock. For the last year of 2020, Berkshire’s stock purchase stood for a record $24.7 billion.
However, the company’s overall earnings considering its fluctuating equity investments dropped to $10.3 billion during the third quarter. The return from Berkshire’s equity investment was only $3.8 billion during the last quarter.
This is a staggering 60% decline year-over-year with $24.2 billion returns in the same quarter last year. However, Buffett stressed that investors shouldn’t put great emphasis on the quarterly changes in investment gains and losses.
“The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules,” the company said in the report.