Berkshire Hathaway's Operating Earnings Soar 67% in the Second Quarter
Berkshire Hathaway shareholders should be pleased with the company's earnings report for the second quarter. The Omaha-based conglomerate reported operating earnings of $6.9 billion, a 67% increase over the year-ago period, due primarily to higher profits in insurance and a lower tax rate thanks to last year's corporate tax cut. [...] Insurance -- $2.1 billion profit
Railroad -- $1.3 billion profit
Manufacturing, service, and retailing -- $2.1 billion profit
Utilities and energy -- $581 million profit
Finance and financial products -- $429 million profit
Improved Insurance Results Lift Berkshire's Earnings
As wide-moat Berkshire Hathaway reported second-quarter results that were basically in line with our expectations, we are leaving our $330,000 ($220) per Class A (B) share fair value estimate in place. Second-quarter (first-half) revenue, which now includes both unrealized and realized gains/losses from Berkshire's investments and derivatives portfolios, increased 19.3% (decreased 2.9%) to $68.6 ($119.0) billion. Excluding the impact of investment and derivative gains/losses and other adjustments, second-quarter (first-half) operating revenue increased 8.4% (decreased 0.8%) to $62.2 ($120.7) billion. [...]
The Omaha, Nebraska-based company also said it's sitting on a $111.1 billion nest egg of cash and cash equivalents, giving speculators ample fodder to theorize over Buffett’s next investment. Berkshire in July loosened its policy on share buybacks, which it says will be repurchased when their value is "below Berkshire’s intrinsic value," Chairman Charlie Munger said. [...]
Buffett has not made a big acquisition since January 2016 when Berkshire paid $32.1 billion for the aircraft-parts manufacturer Precision Castparts. Prior to that, he made headlines with his purchase of truck-stop chain Pilot Flying J in the fall of 2017. [...]
BNSF's second quarter OR comes in weakest of the class 1 railroads
For the second quarter of this year, the operating ratio posted by BNSF was 66.8%. That was worse than the 65.3% of the second quarter of 2017, but was an improvement over the 67.9% posted in the first quarter of this year. Virtually every railroad posted an improved OR between the first and second quarters of this year, as the tough weather of winter 2018 faded away to the milder conditoins of spring and early summer.
The BNSF statement does not discuss management's views of the OR. But an OR of 63% posted by Union Pacific brought a decidedly negative reaction when posted a few weeks ago, particularly in comparison to those of CSX and Canadian National, which were both sub-60%. Other class 1 railroads--Kansas City Southern, Norfolk Southern and Canadian Pacific--were all around 64%, and Canadian Pacific's number was negatively impacted by labor disruptions that resulted in just a small strike but the disruption created by two shutdowns. [...]
Buffett's Berkshire Offers Loan to Owner of Former Sears Properties
Billionaire Warren Buffett's Berkshire Hathaway Inc is loaning up to $2 billion to the company that owns some of what used to be some of Sears Holdings Corp's best real estate.
A subsidiary of Buffett's conglomerate, Berkshire Hathaway Life Insurance Company of Nebraska, is offering what is known as a term loan facility to a New York-based real estate investment trust that owns the struggling retailer's formerly owned retail space.
The real-estate trust, Seritage Growth Properties , was formed as a spin-out of some of Sears' 235 top properties into a publicly traded company of its own in 2015. The U.S. department store operator then leased back some of the properties.
Buffett was an early backer of Seritage. He is personally one of the real estate trust's top owners, holding nearly 6 percent of its outstanding shares. [...]
Pilot Flying J lays off 50 at corporate headquarters Monday
“As part of our strategic process, internationally respected consulting firm Deloitte recently created an analysis of our business as we embark on exciting new initiatives and areas of growth,” Pilot Flying J President Ken Parent said in a released statement. “With these new strategies, we will be re-allocating resources to shift attention to new opportunities and to streamline our operations. [...] We do remain focused on continuing to build upon our standards as an industry leader, having opened 15 new stores this year, building nine more, and creating 17 truck care centers as we look to more efficiently grow our company footprint. Last year Warren Buffett's Berkshire Hathaway bought a 38.6 percent stake in Pilot Flying J. The Haslam family retained a 50.1 percent stake, but by 2023, Omaha-based Berkshire Hathaway’s share will increase to 80 percent. [...]Warren Buffett Is Ending His Meetings With College Students
Billionaire Warren Buffett is ending his long-standing practice of meeting with business students to answer their questions about investing and life.
The Omaha World-Herald reports Buffett's office has told the universities that have been bringing students to Omaha to meet with him for years that he will no longer host the groups. Last year, he met with students from 40 different universities.
One of Buffett's assistants, Joanne Manhart, says Berkshire Hathaway's chairman and CEO is cutting back on speaking engagements.
Manhart says Buffett's health wasn't a factor in the decision, but Buffett will turn 88 on Aug. 30. [...]
