Berkshire's cash rises to $325 billion as Buffett sells Apple and BofA; Operating profit falls

CNN
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Warren Buffett and Berkshire Hathaway extended their withdrawal from stocks in the third quarter, reducing their stakes in Apple and increasing liquidity to a record $325.2 billion.

Berkshire also reported a 6% decline in quarterly operating profit, largely due to higher insurance liabilities, including for Hurricane Helene, and foreign exchange losses due to a stronger U.S. dollar.

These offset improved profitability at auto insurer Geico, where accident claims and costs fell. Profit also rose at BNSF Railroad, which shipped more consumer goods, and at Berkshire Hathaway Energy, where operating costs fell.

In its quarterly report on Saturday, Berkshire said it sold about 100 million, or 25%, of its Apple shares over the summer and ended up selling about 300 million.

More than 600 million shares of the iPhone maker have now been sold in 2024, with Apple remaining Berkshire's largest stock holding at $69.9 billion.

The sales included a large portion of the $36.1 billion worth of stocks, including billions of dollars worth of Bank of America shares, that Berkshire sold this quarter.

Buffett said in May that he expected Apple to remain Berkshire's largest stock investment but that the sale made sense because the 21% federal tax rate on profits would likely rise.

Berkshire bought just $1.5 billion worth of stocks this quarter, making it a net seller of stocks for the eighth straight year.

It also didn't buy back its own shares, suggesting that Buffett doesn't even see his own company's stock as a bargain.

Operating profit at Berkshire's dozens of companies fell to $10.09 billion, or about $7,019 per Class A share, from $10.76 billion a year earlier.

Insurance profits fell 69%, hit by rising claims, $565 million in Helene losses and a legal settlement involving defunct talc supplier Whittaker Clark & ​​Daniels.

This more than offset a near doubling of Geico's underwriting profit.

Berkshire also forecast fourth-quarter pretax losses of $1.3 billion to $1.5 billion from Hurricane Milton, which struck Florida in October.

Net income totaled $26.25 billion, or $18,272 per Class A share, compared with a loss of $12.77 billion, or $8,824 per share, a year earlier, as falling Stock prices reduced the value of Berkshire's investments.

Buffett said operating results better reflect Berkshire's performance.

Accounting rules require Berkshire to disclose unrealized investment gains and losses when it reports net income, leading to higher volatility that Buffett advises investors to ignore.

Buffett, 94, has led Berkshire since 1965 and is expected to hand over the reins to Vice Chairman Greg Abel, 62, at some point.

The Omaha, Nebraska-based conglomerate's businesses also include Berkshire Hathaway Energy, many industrial and manufacturing companies, a major real estate brokerage and retailers such as Dairy Queen and Fruit of the Loom.