Warren Buffett's Berkshire Hathaway earnings: Key takeaways

00:00 Speaker A

Warren Buffett’s Berkshire Hathaway saw its cash pile soar to a record $381.7 billion in the third quarter. Meanwhile, its operating urgent earnings surged by 34% year-over-year. The big focus for investors though remains Warren Buffett’s succession and the lack of share buybacks. Joining us to bring it all down, Kathy Seifert of CFRA.

00:23 Speaker A

Kathy, it’s good to see you. Let’s talk first of all about the quarter and then we can get to sort of the bigger picture questions if you will. It seems like insurance numbers boosted um earnings overall in the quarter, Kathy. and that seems to be sort of a I guess just a quirk of the hurricane season that has had been mild so far.

00:46 Kathy Seifert

Right. I mean, the third quarter of this year kind of set a record. It was the first time in over a decade that a named hurricane, um, did not land on US shores. And the absence of significant catastrophes, um, boosted, um, uh Berkshire’s results as the as well as those of other, um, other insurers. So,

01:03 Kathy Seifert

you know, when you look at these quarterly numbers, they look really good and the stock is indicated to open higher. A lot of them are sort of one-off, um, events, not necessarily sustainable trends.

01:21 Speaker A

Um, and it’s speaking of one-off events, I guess as well is the cadence of M&A that Berkshire has been doing. It did some deals earlier in the year and then nothing, right? So, what do you think all of this implies?

01:40 Kathy Seifert

Well, I mean, you have a company, you have a company at an inflection point at the same time you sort of have a stock market and an economy at an inflection point. Um, you know, they did announce the Oxim acquisition. Um, that’s going to take about a little under $10 billion. I mean, compared to the cash hoard, it’s a drop in the bucket. And so I think, you know,

02:07 Kathy Seifert

there are a couple of things that stood out to me this quarter. Not only the lack, well, not really the lack of M&A activity, but my sense is that once Greg Abel takes the helm, we might have a better sense of the cadence of M&A. At least, I think that’s what investors are hoping for, a little more clarity, a little more transparency, a little more information. Um, but not only did they not acquire

02:29 Kathy Seifert

exterior, you know, external companies, they haven’t bought back any of their own shares this year through the nine months. And, you know, I think that’s kind of a big deal. It sends, in my opinion, it sends a message that they don’t think their shares are undervalued. So, if they don’t think they’re undervalued, why should we?

02:54 Speaker A

Yeah, exactly. I guess that’s the sort of the thinking uh among some investors here, Kathy. But do you think we’re going to get anything dramatically different from Greg Abel on these fronts?

03:07 Kathy Seifert

You know, that’s the big question. and my sense is probably not. But I do think that people are waiting to get a sense of how he’ll put his stamp on operations. And I think there’s an assumption that he’s going to want to bring in, you know, his team. It may not necessarily, um, you know, it may not necessarily percolate up to the point where it’s where it’s commonly, you know, seen that he’s making these changes.

03:32 Kathy Seifert

But I think that, you know, the sense on most of the people who follow this company is that people are waiting to see how Greg will differ. Nobody, I don’t think anyone thinks it’s going to be materially different, but I do think he’s likely to put his own stamp on operations, whether or not that’s tightening up some of the controls, um, maybe being a little more transparent, maybe having a more structured, um, uh acquisition program. We’re going to have to wait and see and I think some of that uncertainty is also weighing on the shares.