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Berkshire Hathaway Earnings: Cash Balances Hit Record $157 Billion as Firm Stays Disciplined

Berkshire Hathaway logo on cellphone.

With wide-moat Berkshire Hathaway BRK.A reporting third-quarter results that were in line with our expectations, we expect to leave our $600,000 ($400) per Class A (B) share fair value estimate in place.

Third-quarter reported revenue, which includes unrealized and realized gains/losses from Berkshire’s investment portfolios, was basically flat at $63.4 billion year over year. On a year-to-date basis, reported revenue increased to $309.2 billion from $141.6 billion when compared with the same period in 2022. Excluding the impact of investment gains/losses and other adjustments, third-quarter (year-to-date) operating revenue increased 21.2% (21.1%) to $93.2 billion ($271.1 billion), with much of the gain coming from the Alleghany acquisition and the onboarding of operating results from Pilot Travel Centers (in January 2023).

Operating earnings, exclusive of investment gains/losses, increased 40.6% (19.2%) year over year to $10.8 billion ($28.9 billion) during the September quarter (first three quarters of the year), with most of the gain being driven by significantly better insurance underwriting results, including the Alleghany acquisition, and higher levels of investment income. When including the impact of the investment gains/losses, reported operating earnings declined (increased) to negative $12.8 billion (positive $58.6 billion) from negative $2.8 billion (negative $40.8 billion) in the prior year’s period(s).

Book value per share declined 2.5% sequentially to $363,413 from $372,966 at the end of June 2023, on par with our internal forecast for the quarter. The firm closed out September 2023 with a record $157.2 billion in cash and cash equivalents, up from $147.4 billion at the end of June 2023, as unutilized free cash flow (owing to a lack of viable investment opportunities), along with net stock sales of $5.3 billion, left cash balances firmly above the $150 billion threshold CEO Warren Buffett has claimed would be difficult to defend.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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Greggory Warren

Strategist
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Greggory Warren, CFA, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the traditional U.S.-and Canadian-based asset managers, as well as Berkshire Hathaway.

Before assuming his current role in 2017, Warren covered the financial-services sector as a senior analyst since late 2008. Prior to that time, he covered non-alcoholic beverage manufacturers and distributors, packaged food firms, food service distributors, and tobacco companies. Before joining Morningstar in 2005, Warren worked as a buy-side equity analyst for more than seven years, covering consumer staples and consumer cyclicals.

Warren holds a bachelor's degree in accounting and English from Augustana College. He also holds the Chartered Financial Analyst® designation and is a member of the CFA Society of Chicago. During 2014-19, Warren was selected to participate on the analyst panel at Berkshire Hathaway’s annual meeting, asking questions directly of Warren Buffett and Charlie Munger. The analyst panel was disbanded ahead of Berkshire’s 2020 annual meeting. Warren also ranked second in the investment services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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