Warren Buffett's Berkshire Hathaway reported Q3 earnings on Saturday. Here are the 4 big takeaways.

Warren Buffett. REUTERS/Rick Wilking
Warren Buffett's Berkshire Hathaway reported its third quarter earnings on Saturday.

The company of the investor shed light on its operations and cash.

Berkshire was badly affected by inflation and labor shortages in the last quarter.

Warren Buffett's Berkshire Hathaway announced third quarter earnings on Saturday. They discussed the company's limited stock-market activity and aggressive share repurchases. They also highlighted its cash reserves and how many of its subsidiaries recovered from the pandemic. However, others struggled with inflation and labor shortages. These are the key takeaways.

1. Portfolio tweaks

Buffett's company net sold approximately $2 billion of stocks last quarter, an increase of $1.1 billion from the second quarter. Buffett and his team sold $7 billion worth of stocks over the nine months ending September 30, suggesting that they didn't find any value in buying stock. Instead, they decided to concentrate their portfolio and pocket some profits.

Berkshire sold approximately $600 million in financial stocks and $500 millions of industrial and commercial stocks on a cost basis during the period. It also invested approximately $90 million in consumer products stocks on the same basis. As of next week's September 30, the company will release its US stock portfolio.

2. Berkshire: Buying Berkshire

Buffett's conglomerate spent $7.6 Billion on stock buybacks in the last quarter, an increase of $6 billion from the second quarter. It spent $45 billion on share buybacks between September 30 and October 30, a far greater amount than the $36 billion it spent to build its huge Apple stake in 2016-2018.

Based on the decline of its outstanding shares over that time and its average stock prices, Berkshire is likely to have repurchased $1.8 billion more stock between October 1st and October 27. This would mean that Berkshire is on track to spend more than $5 billion in buybacks in the quarter. Its total repurchases for this year will be record-breaking $25 billion

3. More cash than ever

Berkshire's cash reserves grew by $5 billion to $149 billion in the last quarter. The cash pile of the company now surpasses that of Starbucks ($138 billion), Philip Morris ($147 billion), and Goldman Sachs ($136 trillion).

Buffett stated in May that he would spend up to $80billion on the right opportunity. Berkshire's growing cash reserves indicate that the investor is still hesitant about stock valuations. He may be priced out of acquisitions made by private equity firms and SPACs and might not consider Berkshire's stock a bargain.

4. Bouncing back

Berkshire's businesses have continued to rebound from the pandemic. The company's total revenue rose 12% to $71 billion due to higher sales in its insurance, railroad and energy businesses. This fueled an 18% increase in operating income to $6.5 million

Berkshire's insurance profits fell by two-thirds to $317million year-on-year due to Hurricane Ida and flooding in Europe, which triggered a spike in claims. McLane Company also suffered a loss due to higher fuel prices and stiffer competition from shrinking truck drivers, which led to increased costs for its staffing.