Berkshire ramps up share repurchases as quarterly operating earnings slip

what happened

Berkshire Hathaway said on Saturday that its operating profit for the third quarter declined, as results from its insurance underwriting business moved lower. According to Reuters, the company spent $9.6 billion repurchasing its shares during the quarter, on top of $4.8 billion bought back earlier in the year.

Operating earnings dropped 6% to $12.71 billion, which works out to roughly $8,954 for each Class A share. A year earlier the figure stood at $13.49 billion. Net income was down 28% at $22.11 billion, though that number includes unrealized gains and losses on equities the Omaha-based firm still holds.

why it matters

The size of the buyback matters for the market because it shows how the company is deploying its capital. The gap between operating and net income reflects swings in the value of its stock portfolio, so the headline figure often depends more on markets than on the underlying businesses.

market impact

Berkshire shares: buybacks add demand, while weaker insurance underwriting weighs on results

• ↔Berkshire Hathaway shares mixed — a $9.6 billion buyback supports demand, but the drop in operating profit weighs on the stock

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