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Berkshire Hathaway’s Cash Pile Reaches Record High
Berkshire Hathaway, led by CEO Warren Buffett, has seen its cash pile climb to a record $157 billion. Buffett has been selling stakes in publicly traded companies due to a lack of appealing investments. In the third quarter alone, Berkshire divested over $5 billion worth of US and foreign stocks. The company’s portfolio of shares also saw a decline in value, dropping to $319 billion from $353 billion. This decline is a result of the broader stock market slide fueled by belief in higher interest rates.
Buffett’s Investment Strategy
Warren Buffett’s investment decisions are closely watched by fund managers and the wider public. Investors look for clues as to where the 93-year-old investor sees attractive returns. In the third quarter, Buffett directed the proceeds from stock sales, along with cash flows from Berkshire’s businesses, into cash and Treasury bills. This surge in cash gives the company significant firepower for potential acquisitions. Berkshire has also benefited from rising US interest rates, earning $1.7 billion in interest income on its insurance investments in the three-month period.
Berkshire’s Profitability and Losses
Berkshire’s operating businesses, including BNSF railroad, Geico insurer, and Precision Castparts, reported a 41% rise in profits to $10.8 billion. The gains were driven by strong underwriting profits at the insurance unit. However, there were weaknesses at BNSF and reserves for wildfire litigation. On the other hand, Berkshire’s real estate-related businesses and apparel and shoemakers, such as Fruit of the Loom, showed declining sales. The company’s auto dealerships and fractional private jet ownership business, NetJets, reported positive results.
Impact of Wildfires
Berkshire also revealed the fallout from wildfires in California and Oregon. The company took a $1.4 billion charge for payouts its utility will likely have to make to individuals who lost their homes in the blaze. This brings the cumulative charges for the wildfires to $2.4 billion, with warnings that ultimate payouts may be even higher. Plaintiffs in Oregon alone have sought $8 billion in damages. These charges contributed to Berkshire’s net loss of $12.8 billion for the period.
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