Berkshire Hathaway’s operating earnings jump as company’s cash holdings soar to record $149bn
Berkshire Hathaway benefitted from the rebound from the pandemic-induced downturn, profiting from its utilities and energy companies.
Additionally, while Buffett has taken a step back to oversee how things unfold, Berkshire’s cash pile is now at a record high of $149bn.
*BERKSHIRE HATHAWAY CASH PILE HITS RECORD $149.2 BILLION— zerohedge (@zerohedge) November 6, 2021
The firm confirmed its operating income of $6.47bn in Q3, up by nearly $1bn year-on-year.
As demand picked up following the pandemic, Berkshire’s earnings, specifically from energy, railroads and utilities rose by 11% to $3.03bn in Q3.
“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,” Berkshire said in its report.
“The extent of the effects over longer terms cannot be reasonably estimated at this time.”
Despite valuations touching record highs, Buffett hasn’t made any large-scale acquisition in the last few years, as competition in the world of investing has intensified.
Warren Buffett is sitting on $149.2 billion in cash right now.— Pomp 🌪 (@APompliano) November 6, 2021
Time will tell if this is the ultimate expression of rationality and patience, or if it is proof that one of the greatest investment runs in history has come to an end.
Buffett's Berkshire has been outperformed by the S&P 500 over the past few years, although it has beaten the US index over the last 12 months.
Perhaps surprisingly, Berkshire’s run has come while opting against deploying their vast cash holdings.
Then again, the last 12 months may be an exception.
Berkshire's Record Cash Build— Lawrence McDonald (@Convertbond) November 6, 2021
*Buffett’s dry powder was unched 2011-2014, now up 61% 2017-2021.
As ever, Buffett is calling for Berkshire’s investors to remain calm, suggesting that they should not place a great deal of emphasis on quarterly changes in their investments.
“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 report said.