(Bloomberg) — Berkshire Hathaway Inc.’s cash pile scaled a fresh record at $157.2 billion, bolstered both by elevated interest rates and a dearth of meaningful deals where billionaire investor Warren Buffett could put his money to work.
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The hoard — which Berkshire has largely parked in short-term Treasuries — hit its highest since level since the third quarter of 2021, the Omaha, Nebraska-based firm said on Saturday. The conglomerate also reported operating earnings of $10.76 billion, a jump on the prior year, as it benefited from the impact of elevated interest rates on the cash pile.
Despite ramping up Berkshire’s acquisition machine in recent years, the company has still struggled to find many of the big-ticket deals that galvanized Buffett’s renown, leaving him with more cash than he and his investing deputies could quickly deploy. After hanging back during the pandemic, he’s since snapped up shares in Occidental Petroleum Corp. and struck a $11.6 billion deal to buy Alleghany Corp. Buffett has also leaned heavily on share repurchases amid the dearth of appealing alternatives, saying the measures benefit shareholders.
The deal drought hasn’t damped investor enthusiasm for the company. Its Class B shares crested a record high in September as investors sought out its diversified range of businesses as a hedge against deteriorating economic conditions. And while the shares pared some of those gains, the stock is still up almost 14% for the full year.
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The firm also spent $1.1 billion on buybacks in the period, bringing the total for the first nine months of the year to about $7 billion.
The company operates and invests in all corners of the US economy, owning businesses including Geico, BNSF, Dairy Queen and See’s Candies, meaning investors view the company as a window into broader economic health. Berkshire said its insurance businesses posted a profit of $2.42 billion versus a loss in the prior-year period, when the insurance industry was being pummeled by catastrophes.
The company’s Geico unit, which had struggled with unprofitability throughout 2022, also posted a profit compared to the same period a year ago, as it curtailed advertising expenses by 54% year-to-date. Still, profit at BNSF, its railroad operations, fell 15% amid lower freight volumes and higher non-fuel operating costs.
Berkshire posted stronger operating earnings despite Buffett cautioning at its annual meeting in Omaha in May that earnings at the majority of its operating units could fall this year as an “incredible period” for the US economy draws to the end. Still, the Federal Reserve’s aggressive pace of rate hikes has helped the firm reap greater yield on the cash it stockpiles primarily in short-dated US Treasuries.
(Updates with further details from earnings statement throughout.)
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