On Saturday morning Eastern Time, Berkshire Hathaway, a subsidiary of Warren Buffett, released its third quarter report, showing a year-on-year increase in operating profit of over 40%. The financial report also shows that the company has a record amount of cash reserves and has slowed down the pace of repurchasing its own stocks.
According to the third quarter financial report, Berkshire achieved a revenue of $93.21 billion in Q3 2023, with a market expectation of $89.882 billion, an increase of 21.2% from $76.9 billion in the same period last year; The net profit loss was $12.767 billion, compared to a loss of $2.698 billion in the same period last year, marking the company's first quarterly loss this year. However, the company still achieved a profit of $58.649 billion in the first three quarters, far better than a loss of $40.8 billion in the same period last year.
The operating profit reflecting the performance of Berkshire's physical businesses such as railways and energy reached $10.761 billion in the third quarter, a year-on-year increase of 40.6%.
Operating profit is a financial indicator that Buffett values highly, far exceeding net profit, as net profit is often influenced by fluctuations in investment returns. According to US accounting standards, the price fluctuations of stocks invested by listed companies will be reflected in the company's performance reports, even if it is only unrealized book gains or losses.
As in previous financial reports, investment returns remain the most important factor affecting a company's net profit indicator. The company suffered a loss of $24.1 billion in investment income in the third quarter, but achieved a cumulative profit of $23.5 billion in the first three quarters.
In the third quarter, Berkshire suffered a loss of $8824 per Class A common share, while a loss of $5.88 per Class B common share.
After Berkshire's total assets exceeded $1 trillion for the first time in the second quarter, the company's total assets decreased to $1019.933 billion in the third quarter, from $1041.573 billion at the end of June.
Slow down repurchase speed and hold record breaking cash
Due to Berkshire's stock price hitting a record high in the third quarter, the pace of stock repurchases by the company has slowed down. In the third quarter, the company only spent about $1.1 billion to repurchase stocks, and the cumulative repurchase amount has reached $7 billion so far this year.
Berkshire's A-share market has risen nearly 14% this year. After reaching a record high of $566570 on September 19th, the stock price has recently fallen, with a cumulative pullback of around 6%.
In addition, Berkshire's cash reserves increased to a record high of $157.24 billion at the end of September and $147.377 billion at the end of June, with the previous record high of $149.2 billion in the third quarter of 2021. At the end of September, the float of Berkshire's insurance companies was approximately $167 billion, an increase of $3 billion compared to the end of last year.
Due to the high interest rate in the United States, Berkshire invested more than $100 billion in short-term treasury bond bonds. At the end of September, the figure was $126.4 billion, compared with $92.77 billion a year ago.
Heavy position stocks remain unchanged
Berkshire's top five heavyweight equity positions remained unchanged during the quarter.
According to the Q3 financial report, Apple remains Berkshire's largest holding with a market value of $156.8 billion; Next are Bank of America ($28.3 billion), American Express ($22.6 billion), Coca Cola ($22.4 billion), and Chevron ($18.6 billion). The holdings of these five stocks account for 78% of their investment portfolio, which is consistent with the previous quarter.
In addition, there are two companies included in the investment portfolio that have a relatively high proportion of shares in the invested companies, namely food company Kraft Heinz and Western Petroleum.
At present, the stocks of Berkshire Kraft Heinz and Western Petroleum are valued at market prices at $10.948 billion and $14.541 billion, respectively.