Berkshire Hathaway offloads $6.1bn of stock

Warren Buffett offloaded stocks for the third consecutive year, as the chief executive of Berkshire Hathaway enters his final months at the sprawling conglomerate he built over more than six decades.

Berkshire Hathaway disclosed on Saturday that it had sold another $6.1bn of common stock in the three months to September 30. Buffett has seen more opportunities in selling than buying equities, with stock prices rising precipitously across several sectors. Over the past three years, Berkshire has sold about $184bn of stock.

The conglomerate’s cash reserves continued to climb and reached a record, with $382bn flowing in from a business that spans insurance, manufacturing, utilities and one of North America’s biggest railways. However, that figure does not include payable charges for short-term Treasury holdings, which Berkshire noted were about $23bn for the quarter.

Berkshire did not buy back any shares for the fifth consecutive quarter, with Buffett deciding to stay on the sidelines.

The group’s share price has lagged the benchmark S&P 500 index since the 95-year-old Buffett announced plans to step down as chief executive at the end of this year. In January he will be succeeded by Greg Abel, the 62-year-old Canadian who is head of Berkshire’s non-insurance businesses.

“This is a solid quarter across the board,” said Chris Bloomstran, the president and chief investment officer of Berkshire shareholder Semper Augustus Investments.

After years on the sidelines without striking any big deals, Berkshire clinched a large transaction last month when it agreed to buy the petrochemicals business of Occidental Petroleum in an all-cash deal for $9.7bn. It was the first significant deal orchestrated by Abel.

Investors have been intensely focused on the succession since Buffett announced in May at the annual shareholder meeting in Omaha that he would be stepping down. In that period, Berkshire’s high-vote class A shares have fallen around 12 per cent, even as the S&P rose about 20 per cent.

But at least some investors remain optimistic. “Greg is perfectly suited to take the reins from Warren,” said Bloomstran. “He gets it. I think he’s the ideal guy to run the business.” 

Buffett has told shareholders to place greater weight on operating profit, which was affected by currency fluctuations over recent months. When currency exchange rates are included, Berkshire’s earnings rose 34 per cent to $13.5bn from a year earlier.

Those profits were boosted in part by Berkshire’s insurance businesses, as its subsidiary Geico grew policies during the quarter and insurance underwriting across the companies tripled to $2.4bn over the past 12 months. 

While the US has had a relatively mild hurricane season, the businesses took a $1.1bn hit this year from California wildfires that devastated Los Angeles.

The conglomerate’s energy business had a more difficult quarter, as Berkshire reported an additional $100mn wildfire loss accrual. PacifiCorp, one of its utility subsidiaries, has wrestled with class-action lawsuits over a 2020 fire in Oregon and California.

Berkshire is known to hold stocks for years, and is among the biggest shareholders of Apple. Although Buffett has not yet disclosed whether he sold shares in the iPhone maker during the third quarter, he has pared back his stake in recent years.

The business’s stock holdings rose to $283bn in the quarter even as he sold investments in the portfolio.