Warren’s Berkshire cash pile entices
Berkshire Hathaway’s lagging stock could get a lift Monday from stronger-thanexpected earnings and a growing pile of cash, which Chief Executive Warren Buffett can use for investments or a long-sought elephant-sized acquisition.
Berkshire’s third-quarter operating earnings, reported Saturday, were up 14 percent to $7.9 billion relative to the yearearlier quarter. Earnings per share gained 15 percent to $4,812, topping the Bloomberg consensus estimate of $4,378. Helping boost earnings was higher investment income.
Its cash hoard grew further in the third quarter, hitting $128 billion, up from $122 billion in the second quarter, despite a $10 billion investment during the period in Occidental Petroleum 8 percent preferred stock. Berkshire agreed to make that investment to help Occidental pursue its controversial acquisition of Anadarko Petroleum.
The class A shares, which finished Friday at $323,400, are up 5.7 percent this year, badly trailing the S&P 500 index.
Berkshire’s stock buybacks were a modest $700 million in the third quarter despite the ample earnings and accumulation of more cash.
But Buffett, 89, who has never been keen about buybacks at Berkshire, has proceeded cautiously, with the company having repurchased $2.8 billion in the first three quarters of this year. Berkshire’s slow buyback pace is ironic given that Buffett has been an enthusiastic proponent of aggressive stock buybacks in companies in which Berkshire has big equity holdings, including Apple and Wells Fargo.