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Warren Buffett's Berkshire Hathaway reports $12.8 billion loss as investments fall

Warren Buffet 2023 11 06

Berkshire Hathaway said Saturday it lost $12.8 billion, or $8,824 per Class A share, for the quarter. That's significantly wider than the loss of $2.8 billion, or $1,907 per Class A share, it reported a year ago.

But most of those investment losses went unrealized because Berkshire didn't actually sell most of its shares, and its largest holding was its huge stake in Apple. Accounting rules require the company to include in its earnings the value of its investments, which it valued at $341.1 billion at the end of the quarter. Last quarter, the company said its stock portfolio was valued at $353 billion.

That's why Buffett has long said investors are better off focusing on Berkshire's operating earnings, which exclude the value of its investments, which can vary widely from quarter to quarter. Berkshire said its operating profit jumped nearly 41% to $10.8 billion, or $7,437.15 per Class A share. That's up from $7.65 billion, or $5,215.60 per Class A share, a year ago.

Three analysts surveyed by FactSet Research expected Berkshire to report operating earnings per share of $6,540.23 on average.

In addition to insurers, the Omaha, Nebraska-based conglomerate owns the BNSF railroad, several major utilities and a diverse assortment of manufacturing and retail firms, including aircraft parts maker Precision Castparts, See's Candy, Dairy Queen and Helzberg Diamonds.

The railroad's profit fell to $1.2 billion from $1.4 billion last year as BNSF moved nearly 5% less shipments, with the biggest drop in volumes coming from consumer goods.

The utility division contributed just $498 million to Berkshire's operating profit, down from $1.6 billion a year ago, as its operating expenses rose 55% to $3.7 billion. The biggest cost driver was a $1.3 billion loss , related to wildfires in a PacifiCorp division.

Berkshire made a profit of $183 million in the quarter thanks to the acquisition of 80% of the Pilot Flying J truck stop chain it made earlier this year, but it was not mentioned in the quarterly report. Lawsuit Pilot's founding family recently filed to settle a dispute over how much Berkshire will pay to acquire the remaining 20%.

Berkshire repurchased $1.1 billion of its own shares during the quarter, but the pace of its repurchases was down significantly from the first quarter, when the company bought $4.4 billion of Berkshire shares. Buffett only buys back Berkshire shares when he believes they are being sold at a good price.

Buffett still has a huge pile of cash because he hasn't made any major investments or acquisitions this year. Berkshire had $157.2 billion in cash at the end of the quarter, up from $147.4 billion at the end of the second quarter.

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