Berkshire Hathaway Inc (BRKa.N) on Saturday said its quarterly operating profit rose more than analysts expected, as growth in several business lines offset the drag from trade tensions and tariffs and billionaire Warren Buffett’s inability to deploy the conglomerate’s cash, reports Trend referring to Reuters.
Berkshire benefited as resilience in consumer spending helped cause U.S. economic growth to slow less than expected, offsetting a contraction in business investment.
But rising stock prices are still impeding Buffett’s efforts to find places to invest.
Berkshire ended September with a record $128.2 billion of cash, despite repurchasing $700 million of stock in the quarter.
Buffett has gone nearly four years since making a major acquisition for Berkshire, whose stock price has lagged the broader market by the most since 2009.
“There is a growing frustration among investors that the cash hoard is not being effectively deployed,” Cathy Seifert, an equity analyst at CFRA Research in New York, said after Berkshire released its results. “The flip side is that Berkshire’s stock tends to do well when the economy softens.”
Seifert also said Berkshire’s sprawl means results will often mirror macroeconomic trends. “It’s not surprising that tariffs had a negative impact on its consumer and industrial businesses,” she said. Seifert rates Berkshire “hold.”
Berkshire said third-quarter operating income rose 14% to $7.86 billion, or roughly $4,816 per Class A share, from $6.88 billion, or roughly $4,189 per share, a year earlier.
Analysts on average expected operating profit of $4,405.16 per share, according to Refinitiv IBES.
Net income fell 11% to $16.52 billion, or $10,119 per Class A share, from $18.54 billion, or $11,280 per share, reflecting fewer gains from Berkshire’s investments.
A U.S. accounting rule requires earnings to reflect unrealized gains, including on Berkshire’s respective $57 billion and $27.8 billion stakes in Apple Inc (AAPL.O) and Bank of America Corp (BAC.N). Buffett said the resulting volatility can mislead investors.
Berkshire is based in Omaha, Nebraska, and operates more than 90 businesses including the Geico auto insurer, BNSF railroad, Dairy Queen ice cream, Fruit of the Loom underwear, and its namesake energy company and real estate brokerage.
Class A shares of Berkshire closed Friday at $323,400, up 5.7% in 2019, lagging the 22.3% gain in the Standard & Poor's 500 .SPX. Class B shares closed at $215.83, also up 5.7%.