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The company's latest quarterly report suggests it may have further reduced its stake in Bank of America. While the full details of what the company owns won't be public for another week, the math in the filing points to a continued exit from the bank and a possible new interest in Alphabet, the owner of Google.
This shift is worth watching because it shows how the company is managing its massive stock portfolio. Moving money out of banks and into tech giants like Alphabet suggests a preference for businesses with high profit margins and digital growth over traditional lenders, especially as the company sits on a record amount of cash.
Source: Barrons
Berkshire Hathaway used its third-quarter results to reveal it spent $9.6 billion buying back its own shares, the highest amount it has ever spent on buybacks in a single quarter. A buyback is when a company uses its cash to buy its own stock from the market, which reduces the total number of shares and makes each remaining share own a larger piece of the business.
This move shows that CEO Greg Abel is willing to use the company's massive cash reserves when he believes the stock is a good value. While insurance profits were softer this quarter, the record buyback signals that management sees their own stock as one of the best places to put money to work right now.
Source: Bloomberg Markets and Finance
The company reported operating earnings of about $13 billion for the quarter, up from roughly $11 billion a year ago. Operating earnings are the profits from the businesses Berkshire actually owns and runs, like Geico and the BNSF railway, and they are the best way to see how the company is performing day-to-day.
Net income more than doubled to $25.7 billion, though that number includes paper gains on stocks the company has not sold yet. While the stock portfolio can swing wildly based on market prices, the underlying businesses showed steady growth. The results suggest that the company's collection of insurance and energy firms remains a reliable engine for generating cash.
See the full quarter, and how our tracked metrics did
Source: Company earnings report
Pacific Power, a utility owned by Berkshire Hathaway, is asking California regulators to approve a major price increase for its customers. If approved, the typical monthly bill for a home would jump by about $120.
Utilities often ask for rate hikes to pay for upgrades to the electrical grid or to cover the costs of preventing wildfires. While a 57 percent increase is unusually large and will likely face pushback from local groups, any approval would help protect the utility's profits as it deals with rising costs in the state.
Source: WSJ
The company is expected to report revenue of about 101 billion dollars for the quarter. While the headline profit numbers are often skewed by paper gains or losses in its massive stock portfolio, the real focus for long-term owners remains on the operating earnings from its insurance, railroad, and energy businesses. We will also be watching for any update on the company's cash pile, which recently sat at a record 334 billion dollars. How much of that cash was used to buy back its own shares or invest in new businesses is the most important signal of how management views today's market prices.
Management sets very conservative targets and has cleared them in six of the last eight quarters, showing they have a firm handle on their diverse collection of businesses.
| Expectation | |
|---|---|
| EPS | $5.28 |
| Revenue | $101.60B |
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