Berkshire Hathaway (BRK.A) Posts Quarterly Earnings Results, Beats

Berkshire has close to 90 operating businesses including the General Re reinsurer, Lubrizol chemicals, NetJets business jets and Dairy Queen ice cream.

Berkshire had previously owned a majority of the former H.J. Heinz Co, and at the time of the merger had more than doubled its original investment in just two years. Buffett, 85, has run Omaha, Nebraska-based Berkshire since 1965.

Results reflected a roughly $6.8 billion pre-tax gain, or $4.4 billion after taxes, on Kraft Heinz.Buffett helped finance the July merger that created the food company, whose products include Oscar Mayer sandwich meats, Jell-O and Heinz ketchup, and is its largest shareholder with 26.8 percent stake.

Berkshire’s gain reflects “the hard work 3G has done cutting costs at Heinz and now Kraft”, said Matthews, who recently sold his Berkshire stock. Revenue growth was 15 % YoY at $ 58.99 billion which is lower than analysts’ estimates of $ 61.19 billion.

Buffett and his deputy investment managers spent $4.1 billion on equities and $2.36 billion on fixed-maturity securities in the quarter.

Book value, a measure of assets minus liabilities, rose nearly 1% from 30 June to $151,083 a share.

Morningstar analyst Greggory Warren said in a report Friday that the Heinz gain masked a lackluster quarter for Berkshire, which “released results for the third quarter of 2015 that were basically in line with our expectations, despite being affected a bit more heavily by market volatility than we had been anticipating”. They said there were no plans for selling their IBM shares and they expected the investment to recover eventually. At GEICO, people across America appear to be driving more and enjoying low gas prices…and getting into more accidents.

On August 10, Berkshire announced its largest company acquisition ever, Precision Castparts (NYSE:PCP), which makes components for aerospace and other industries, for $37.2 billion, including debt.

The railroad, BNSF, contributed $1.16 billion to quarterly earnings, compared with $1.04 billion a year earlier.

Their insurance companies have produced an underwriting profit of $ 414 million, compared to underwriting loss of $ 38 million in the last quarter and a profit of $ 629 million in 2014.

Those deals will certainly charge up Berkshire’s profits, but they will also use a significant chunk of the $66.2 billion cash it held at the end of September. Vetr raised shares of Berkshire Hathaway from a “buy” rating to a “strong-buy” rating and set a $228,293.00 price objective for the company in a research note on Monday.