Berkshire’s operating earnings pop 18% last quarter with Buffett’s cash pile at record $149 billion

Berkshire Hathaway saw another double-digit increase in its operating profit thanks to a continuous rebound in it railroad, utilities and energy businesses from the pandemic, while the company’s cash pile hit a record high as Warren Buffett continued to sit on the sidelines.

The conglomerate reported operating income of $6.47 billion in the third quarter, rising 18% from $5.48 billion in the same quarter a year ago, according to its earnings report released on Saturday.

Berkshire said its myriad of businesses has benefited from the economic reopening as demand started to return to pre-pandemic levels. Operating earnings from its railroad, utilities and energy segment grew 11% year over year to $3.03 billion in the third quarter.

“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 the report. “The extent of the effects over longer terms cannot be reasonably estimated at this time.”

At the end of September, Berkshire’s cash pile reached a record $149.2 billion, up from $144.1 billion in the second quarter. Buffett hasn’t made a sizable acquisition in the last few years as valuations hit record highs and the deal-making environment turned competitive.

The record amount of cash came despite Berkshire’s aggressive share buybacks. The company repurchased $7.6 billion of its own stock in the third quarter, bringing the nine month total to $20.2 billion. Berkshire bought a record $24.7 billion of its own stock last year.

Overall earnings, which reflect Berkshire’s fluctuating equity investments, fell to $10.3 billion in the third quarter, marking a more than 60% decline year over year. The return from Berkshire’s equity investments only totaled $3.8 billion last quarter, compared to a $24.8 billion gain a year ago.

Buffett stressed that investors shouldn’t put much emphasis on the quarterly changes in its investment gains or losses.

“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 conglomerate said in the quarterly report.

Berkshire’s B shares are up more than 24% this year, sitting about 2% below its record high reached in May.