Shares of Warren Buffett's holding company, Berkshire Hathaway Inc (NYSE:BRK.A), rose in premarket trade Monday after the conglomerate smashed third quarter earnings estimates due to stronger insurance results, lower taxes and solid gains from its massive investment portfolio.
For the quarter ended September 2018, the industrial and insurance conglomerate posted earnings of $2.79 per share on revenue of $63.5 billion. This handily beat consensus earnings estimates of $2.50 per share. Revenue grew 4.8% on a year-over-year basis.
Insurance underwriting income was $441 million in the third quarter, compared to a loss of $1.4 billion in the year-ago period.
The company was awash with cash as available cash on its balance sheet soared to $36.5 billion at the end of September from $25.5 billion at the start of the year.
Berkshire also reported a rare stock buyback of $928 million after the board in July removed strict limits that essentially prohibited share repurchases. The last time Berkshire bought its own stock was in December 2012.
The market of course loves a stock buyback and it has been one factor helping fuel the market run to record highs in 2018. They lower a company's overall share count, which in turn boosts earnings per share.
“The move also indicates that Buffett, an investing guru known as the Oracle of Omaha, has not seen many attractive new options at a time of sky-high valuations. Buffett earlier this year said his investment philosophy is to stick with ‘big, easy decisions and eschew activity’,” reported CNN Business.
Shares in Berkshire Hathaway rose modestly to $308,411.
Contact Uttara Choudhury at [email protected]