Warren Buffett's Berkshire Hathaway (NYSE:BRKa) reported a challenging third quarter, marked by a $23.5 billion investment loss, largely due to declining stakes in Apple (NASDAQ:AAPL), American Express (NYSE:AXP), Coca-Cola (NYSE:KO), and Bank of America. The strategic sale of over 12 million Chevron (NYSE:CVX) shares ahead of its Hess (NYSE:HES) acquisition further affected the portfolio value, causing it to drop from $353 billion to $319 billion.
Despite these setbacks, the conglomerate managed to report a 40.6% surge in Q3 operating earnings to $10.761 billion. This was driven by rising interest rates that benefited its insurance businesses like Geico and BNSF Railway. These businesses generated $1.7 billion in interest income, which helped boost operating income to nearly $11 billion.
The company also reported an unprecedented cash reserve of $157.2 billion, propelled by Buffett's strategy of acquiring high-yield short-term Treasury bills and amassing holdings of $126.4 billion. Charlie Munger hinted at a potential major acquisition in an interview with The Wall Street Journal, which could be a strategic move utilizing this record cash reserve.
However, despite soaring share prices, the company's share buyback program slowed down, with just $1.1 billion spent in Q3. Berkshire Hathaway's Class A shares appreciated nearly 14% this year but experienced a 6% slump from their September peak.
Among its portfolio companies, Geico reported strong underwriting earnings of $1.1 billion. In contrast, BNSF Railway faced a 15% profit drop due to dwindling freight volumes and escalating costs.
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