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Berkshire’s 3rd Quarter November 8, 2010

Posted by shaferfinancial in Finance.
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Since there were no major changes in Berkshire Hathaway and the annual report will be the next one, I will keep this concise.

The third quarter was a solid quarter with book value increasing 4.8% to $90,823. The highest ever book value. Operating earnings increased to $2.8 billion [an increase of 35.6% from the year before]. Net earnings decreased to $3B due to an accounting loss in the derivatives Berkshire owns. Net earnings were slightly smaller than last quarter. For the first 9 months of the year, net earnings were $5265 per A share compared to $3232 for the same time period in 2009.

Most interestingly, the cash Berkshire is carrying is up to $31 Billion.

Swiss Re has reported it will pay back Berkshire for the preferred stock it sold it 20 months ago. The total return for Berkshire should be in the neighborhood of 61% [24% interest owed for a full two years + 20% pre-payment penalty + 17% currency arbitrage from Swiss Francs]. Not bad for in the middle of a recession! But that will add almost $5 Billion more into the coffers. There is also a rumor that Goldman Sachs wants to repay before the end of the year. That could add in some more serious cash. What Buffett is planning to do with this cash [besides pay down some debt taken on in the BNSF acquisition] is not known. Some are speculating about another large acquisition.

In short, Berkshire keep moving in the positive direction with double digit annual book value increase expected for the year.

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