Buffett’s Berkshire suffers in pandemic

WASHINGTON: Warren Buffett’s Berkshire Hathaway Inc reported lower quarterly operating results and said the coronavirus pandemic may cause further damage, even as gains in stocks such as Apple Inc fuelled a more than $30 billion overall profit.
Some Berkshire operating businesses have rebounded from their spring depths, and analysts were encouraged that revenue fell just 3 per cent from a year earlier.
But COVID-19, hurricanes and low interest rates hurt profit from insurance businesses, which include the Geico auto insurer, and the Precision Castparts aircraft parts unit projected thousands of additional job losses.
Berkshire also repurchased a record $9.3 billion of its underperforming stock in the third-quarter, as Buffett remained unable to find the huge acquisitions the 90-year-old billionaire wants to spur growth.
Buybacks totalled $16 billion from January to September, and appeared to total at least $2.3 billion in October because Berkshire’s share count dropped.
“The market will be encouraged by the buybacks’’, said Cathy Seifert, an analyst at CFRA Research with a “hold” rating on Berkshire.
“Many companies halted buybacks to preserve resources during the pandemic, though because Berkshire doesn’t pay a dividend the amount it is returning to shareholders pales bit.”
Third-quarter operating profit fell 32 per cent to $5.48 billion, or about $3,488 per Class A share, from $8.07 billion a year earlier.
Net income rose 82 per cent to $30.1 billion, or $18,994 per Class A share, from $16.5 billion or $10,119 per share.
Revenue totalled $63 billion.
Berkshire reported $24.8 billion of gains from investments such as Apple, whose stock rose 27 per cent in the quarter and at $111.7 billion is by far Berkshire’s biggest stock holding, comprising 46 per cent of its portfolio.
Nevertheless, it appears Berkshire may have sold some Apple stock because the stake should have been a few billion dollars higher, based on previously disclosed stakes, if none was sold.
Net results are volatile because an accounting rule requires it to report unrealized gains and losses on its stocks. — Reuters