Berkshire Hathaway Cash Reserves Surge to $325 Billion Amid Apple, Bank of America Stock Sales; Operating Profits Decline
Berkshire Hathaway, led by Warren Buffett, increased its cash reserves to an unprecedented $325.2 billion in the third quarter as the investment firm scaled back its stock holdings, notably reducing shares in Apple and Bank of America. The Omaha-based conglomerate’s recent quarterly report revealed a 6% drop in operating profit, driven by heightened insurance underwriting costs, including liabilities for Hurricane Helene, and currency losses tied to a stronger U.S. dollar.
Although Berkshire reported a decline in overall operating profit, specific segments of the business saw notable gains. Geico, Berkshire’s car insurance provider, achieved increased profitability due to a reduction in accident claims and expenses. Meanwhile, BNSF Railway benefited from higher consumer goods shipping, and Berkshire Hathaway Energy saw profit growth due to lower operational expenses.
Over the summer, Berkshire sold approximately 100 million Apple shares, amounting to 25% of its total stake, though the tech giant remains Berkshire’s largest stock holding, valued at $69.9 billion. The company has now sold more than 600 million Apple shares in 2024 alone, alongside significant sales of Bank of America stock. Buffett’s strategic sale of assets reflects a cautious approach to stock holdings, despite his expectation that Apple would continue to be Berkshire’s top investment.
The company’s selling trend continued for the eighth consecutive quarter, with only $1.5 billion in stock purchases and no repurchases of its own stock, implying that Buffett does not currently see Berkshire shares as undervalued.
Berkshire’s third-quarter operating profit, spanning its extensive holdings, dropped to $10.09 billion, with insurance underwriting profits sharply declining by 69%. The dip was influenced by rising insurance claims, $565 million in damages related to Hurricane Helene, and a bankruptcy settlement involving former talc supplier Whittaker Clark & Daniels. Looking ahead, Berkshire has projected potential losses between $1.3 billion and $1.5 billion in the fourth quarter due to Hurricane Milton, which hit Florida in October.
Despite the quarterly operating challenges, Berkshire’s net income surged to $26.25 billion, or $18,272 per Class A share, compared to a loss of $12.77 billion in the same period last year. This volatility in net income is largely due to accounting rules that require Berkshire to record unrealized investment gains and losses as part of net income, a factor Buffett has previously urged investors to overlook in favor of operating results for a clearer picture of company performance.
Warren Buffett, 94, continues to lead Berkshire, a company he has grown since 1965 into a diversified conglomerate encompassing Berkshire Hathaway Energy, BNSF Railway, industrial and manufacturing ventures, and retail brands including Dairy Queen and Fruit of the Loom. Buffett is expected to eventually transition leadership to Vice Chairman Greg Abel, 62.
