Rate hikes improve Warren Buffett’s Berkshire Hathaway results.

Warren Buffett’s Berkshire Hathaway has become one of the major beneficiaries of a sharp rise in US interest rates as its fortress-like balance sheet begins generating hundreds of millions of dollars in revenues for giant conglomerates. It revealed on Saturday that it nearly tripled to $397 million in the third quarter from a year ago, “primarily driven by short-term interest rate hikes.” Berkshire holds most of its cash in short-term treasury bonds, bank deposits, and short-term financial market accounts. Last week, the US central bank raised near-zero interest rates to 3.75 to 4% at the beginning of the year, and traders expect that rate to hit as high as 5% next year. Value Berkshire’s staggering portfolio of stocks — finally starting to pay dividends to cash-holding businesses and consumers. Cash deposited in money market funds for the average individual investor hit an all-time high, according to data from the Investment Company Institute. They believe the company’s insurance business is very important given the potentially catastrophic payouts it will have to pay someday. That was a point highlighted by Q3 results showing Berkshire suffered a pre-tax loss of $3.4 billion from Hurricane Ian. More than 100 people have died as they swept through parts of Florida. US President Joe Biden said it would take years, not months, for the region to recover. Berkshire’s insurance division suffered an operating loss of $962 million during the quarter, and Geico warns that rising used auto parts prices and rising accidents are a burden. to that result. Buffett and Munger have been able to sustain heavy losses for a long time in the insurance sector due to significant “liquidity”. In other words, it is the premium you collect before you ultimately have to pay a claim for an obligation. The float helped stimulate investment in stocks and finance the company’s takeover. The financial market sell-off has disrupted Berkshire’s stock portfolio, which includes large stakes in Apple, American Express, Chevron and Bank of America. The company said its portfolio value declined to $306.2 billion from $327.7 billion at the end of June. Buffett has long characterized the changes in an investment portfolio that, due to accounting rules, should be recognized in the income statement as “insignificant”. A recession designed by the Fed. Berkshire’s results also showed the fight for better wages as the effects of inflation and real living standards are under pressure from higher prices. BNSF Rail’s revenue soared 17% to $6.5 billion, but transport volume declined and profits declined. He paid higher wages to his employees. The railroad became a gunpowder earlier this year when more than 30,000 union members in the BNSF threatened a strike, opposed the terms and demanded a raise. An interim settlement in September provided concessions for employees, and BNSF said payroll costs were up 27% in the third quarter from a year earlier. The energy business within Berkshire’s utilities division reported a 17% increase in revenue due to higher electricity costs. However, the company’s real estate brokerage division saw sales plummet by nearly a fifth and operating profit plunged 72% year-over-year as the housing market cooled and home sales declined. Berkshire said it expects high mortgage rates to also put pressure on a minority in the housing sector. However, during the quarter, its businesses, including brick maker Acme and flooring group Shaw, were able to raise prices and recorded strong demand, and overall operating profit increased to $7.8 billion from $6.5 billion a year earlier. The result was helped by larger profits in its manufacturing and services business. Berkshire, which bought a 21% common share stake in energy company Occidental this year, said it will begin reporting earnings for the oil and gas conglomerate in the fourth quarter. The company also said it spent more than $1 billion in repurchasing shares in the quarter. Berkshire’s Class A stock, down 4.1% this year, far outperformed the overall market. The benchmark S&P 500 fell 20.9% and US Treasury investors fell 15.3%, according to Ice Data Services.
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