The loss is mainly due to the company’s massive investment in Tesco, a British grocery chain. The chain has experienced significant losses this year. The store has not only been struggling, but recently admitted to exaggerating its profit forecasts.
Despite the loss, the investment company is still making strides. The $4.6 billion earned during the last quarter is better than Wall Street was expecting. Although they are down nearly 9% from the same period last year, profits for the first 9 months of the year are still better than they were this time last year. While the announcement wasn’t what Warren Buffet and Berkshire Hathaway would have liked to have made, it could have been a lot worse.
Tesco wasn’t the only investment to disappoint Berkshire. They also lost big time on shares of Coca-Cola and IBM after both companies garnered unusually poor earnings. Coca Cola’s shares fell the most in 6 years, from $11.98 billion in the quarter from $12 billion a year earlier. Coke, which is one of Berkshire’s largest investments, cut back on executive pay.
However, these are only a few set backs for the mega investment firm. The company reported holding $62.4 billion at the end of the quarter, which is up from $42 billion in 2013. Buffett biographer, Andy Kilpatrick, told USA Today, “[Buffett] is really piling up the cash. Berkshire’s subsidiaries are generating solid profits, and the company is in good position for a significant acquisition if Buffett finds the right business.”
Berkshire’s Burlington Northern Santa Fe (BNSF) railroad proved a successful quarter, reeling in $1.035 billion net income, which is up from $989 million from last year. It produced 2% more freight carloads and charged 3% more per car on average. Berkshire’s insurance underwriting profit rose from $629 million from 2013’s $170 million due to lack of major catastrophes.
Berkshire is the proprietor of 80 subsidiaries that range from clothing to jewelry and furniture companies. It’s insurance and utility sector usually accounts for over 50% of the company’s net income.
Berkshire Hathaway also holds a massive stake in Wells Fargo with some 463 million shares. This is around 9% of the total bank. It is currently Berkshire’s largest stock investment.
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