(Adds financial details throughout, economic and geopolitical environment, litigation, byline)
By Jonathan Stempel
Nov 4 (Reuters) – Warren Buffett’s Berkshire Hathaway Inc on Saturday posted its first overall quarterly loss in a year as the prices of Apple and other stocks it owns fell, but said improved results from insurance helped boost operating profit to a record.
Rising interest rates boosted yields on Berkshire’s vast U.S. Treasury bill holdings above 5%, while fewer car accidents and a quiet Atlantic hurricane season respectively bolstered the Geico car insurer and reinsurance businesses.
Berkshire nonetheless signaled it remains cautious about stock valuations and the market environment.
The Omaha, Nebraska-based conglomerate’s cash stake swelled in the third quarter to a record $157.2 billion, as Berkshire sold $5.3 billion more stocks than it bought and slowed repurchases of its own stock, buying back $1.1 billion.
Berkshire also reported signs of caution among consumers.
It said its BNSF railroad shipped fewer consumer goods, while lower homebuying hurt its namesake real estate brokerage and Clayton Homes unit, and sales of Forest River RVs and apparel from units such as Fruit of the Loom also fell.
Jazwares, a toymaker that makes the popular Squishmallows and which Berkshire bought one year ago, helped offset those declines, generating $469 million of revenue in the quarter.
Investors watch Berkshire closely because its results often reflect broader economic trends, and because of the 93-year-old Buffett’s reputation as one of the world’s greatest investors.
Berkshire’s third-quarter net loss more than quadrupled to $12.77 billion, or $8,824 per Class A share, from $2.8 billion a year earlier.
Results included $23.5 billion of losses from investments, primarily reflecting a 12% decline in the stock price of iPhone maker Apple, in which Berkshire had owned a $177.6 billion stake.
Berkshire’s net results swing widely from quarter to quarter because accounting rules require the company to report investment gains and losses even if it buys and sells nothing.
Buffett says the volatility is usually meaningless, and Berkshire appears to have kept its Apple stake.
Operating profit rose 41% to $10.76 billion, or $7,444 per Class A share, from $7.65 billion a year earlier.
Insurance operations generated $4.89 billion of profit, up from just $336 million a year earlier, when it lost $2.7 billion from Hurricane Ian alone.
Among other businesses, BNSF, which often accounts for about one-fifth of Berkshire’s operating profit, saw net income fall 15% to $1.22 billion.
Profit from Berkshire’s energy businesses slid 69% to $498 million, as the PacifiCorp utility forecast more losses from litigation over wildfires in the western United States.
Berkshire said it could not predict the impact on its HomeServices of America unit of an Oct. 31 jury verdict awarding home sellers $1.78 billion over an alleged conspiracy among several defendants to inflate broker commissions.
It also said geopolitical risks around the world could affect future results, though its IMC metalworking unit, which makes many of its products in Israel, has yet to be affected by the war between that country and Hamas.
Buffett has run Berkshire since 1965. His $117.5 billion net worth ranks fifth worldwide according to Forbes magazine.
Berkshire shares are up 14% this year, matching the Standard & Poor’s 500. (Reporting by Jonathan Stempel in New York; editing by Jason Neely and Diane Craft)
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