Q3 Reports show that Berkshire Hathaway’s third-quarter profit exceeds expectation – Top Insurance Blogs

The
operating profit of the American conglomerate Berkshire Hathaway exceeded
projections as results were released for the third quarter. The corporation run
by the billionaire Warren Buffet posted a quarterly return that supersedes what
analyst proposed in the third quarter of 2019.

In its quarterly earnings reports released over the weekend, the company revealed a better-than-expected operating profit of US$7.86 billion during the third quarter alone. And within Berkshire Hathaway’s core insurance business, the company reported that insurance float, as of September 30, was approximately US$127 billion – an increase of US$4 billion since year-end 2018.

Helping the
company’s massive insurance operations were lower estimated liabilities from
property and casualty insurance in prior years and lower taxes. During the
period last year, the company experienced major losses due to three U.S.
hurricanes and an earthquake in Mexico.

Last year,
operating profits doubled, rising to US$ 6.88 billion from US$ 4.11 billion a
year earlier, way ahead of the US$ 6.11 billion predicted by the Wall Street.
Trends show that the company’s growth keeps exceeding expectations

Investors expecting ‘elephant-sized acquisition’

The Berkshire
Hathaway Inc. has gone for a near four-year stint without a major acquisition,
leading to what is termed as ‘cash hoarding’ by stakeholders and analysts

Warren Buffett as the Chief Executive Officer of the conglomerate holding large investments in major industries including transportation, banking, insurance, and food complained in his annual letter to shareholders earlier in the year about the challenge of finding suitable acquisition targets that are also reasonably priced.

“Prices are
sky-high for businesses possessing decent long-term prospects,” wrote Buffett.
“That disappointing reality means that 2019 will likely see us again expanding
our holdings of marketable equities. We continue, nevertheless, to hope for an
elephant-sized acquisition.”.

The company
increased its cash hoard to US$128.2 billion due to the inability of its management
to find a suitable acquisition that is large enough and will ensure a
guaranteed return on investment to its shareholders this is caused in part by
the increasing stock prices which are impeding Buffet’s effort to find an
investment that is reasonable enough.

An equity analyst at CFRA Research in New York, Cathy Seifert said last weekend after the third-quarter results were released that there is a growing frustration among investors that the cash hoard is not being effectively deployed, she also added that “The flip side is that Berkshire’s stock tends to do well when the economy softens.”

Berkshire
ended September with a record $128.2 billion of cash, despite repurchasing $700
million of stock in the quarter.

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