Warren Buffett’s Berkshire Hathaway reported improved operating results as it extended its rebound from the early stages of the pandemic, even as it cut back some stock holdings and boosted its cash hoard to a record.
Berkshire also said it repurchased $7.6bn of its own stock in the third quarter, reflecting its need to put cash to work as share prices regularly set new highs and purchases of whole companies appeared too expensive.
The repurchases and other stock market activity suggest Buffett sees greater value in his own company than in others.
Indeed, Berkshire ended September with $149.2bn of cash and equivalents, and sold about $2bn more stock than it bought in the quarter.
Third-quarter operating profit rose 18 per cent to $6.47bn, or about $4,331 per class A share, from $5.48bn in the year-earlier period.
Net income declined 66 per cent to $10.3bn, or $6,882 per class A share, from $30.1bn, reflecting lower unrealised gains on Berkshire’s common stock holdings including Apple and Bank of America.
The share repurchases boosted total buybacks to $20.2bn this year, and close to $45bn since the end of 2019. Berkshire’s share count declined further in October, suggesting it repurchased another $1.7bn of its own stock.
Buffett’s inactivity in purchasing stocks and whole companies has disappointed some investors and analysts.
It stems in part from the stock market rally and the role of Spacs — special purpose acquisition companies that take private companies public — in driving up prices of acquisition targets.
“It’s a killer,” Buffett said at Berkshire’s annual meeting on May 1, referring to Spacs.