Warren Buffett tightens cash as Berkshire investments take a hit: reports

Warren Buffett’s Berkshire Hathaway reported losses of $12.8 billion, as the company’s portfolio performed poorly, underscored by the billionaire’s unwillingness to spend on new investments while holding more than $157 billion in cash.

The company’s third-quarter loss beats that reported in the same period last year, when Berkshire lost $2.8 billion. Despite this significant decline, the company’s portfolio is worth more than $341 billion.

Apple, one of the most important holdings in Berkshire’s portfolio and accounting for nearly half of its value, fell $25 a share after peaking at about $196.45 a share in July.

However, Buffett routinely emphasized that investors should not worry about investment performance, as the value in the stock market can vary widely. Instead, he said they should measure Berkshire’s success by its operating profits, which reached $10.8 billion — a 41% increase in value, according to the Associated Press.

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Analysts expected Berkshire to report operating earnings of $6,540.23 per Class A share, but instead the company generated $7,437.15 per Class A share.

Instead, the company’s core operations rely on insurance companies and other properties acquired throughout the year, such as Geico, which has rebounded this year after reporting losses in six straight quarters heading into 2023. This year, the insurer generated underwriting profits of $703. Millions of dollars in the first quarter. 2023 and $514 million in the second quarter of 2023, according to Quartz.

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Geico cited higher insurance premiums as a result of increased car prices, and a decline in both collision claims and its advertising budget as factors that turned around its fortunes, which in turn helped boost Berkshire.

Berkshire’s other insurance holdings have also benefited from a “quiet” hurricane season in the Atlantic, which means fewer losses to deal with, according to the New York Times.

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FILE PHOTO: Berkshire Hathaway shareholders walk in front of a video screen at the company’s annual meeting in Omaha. (Reuters/Rick Wilking/Archive Photo/Reuters Photos)

The company also counts See’s Candies, Dairy Queen, Helzberg Diamonds, Coca-Cola, American Express, Chevron, BNSF Railway and several utility companies in those core operations. BNSF reported a decline in earnings compared to the same quarter last year, but that still came to $1.2 billion.

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Berkshire sold $5.3 billion more shares than it bought, leaving more cash waiting to be invested. One of those purchases included $1.1 billion of its own stock in the quarter, but that represents a decline from the first quarter of 2023, when it repurchased $4.4 billion of its own stock.

Buffett also increased his holdings in Occidental Petroleum, acquiring just 0.7% of the company’s shares as shares declined during the final weeks of October. Berkshire had already increased its holdings in June, bringing total ownership to more than 25% of Occidental.