Berkshire Hathaway Inc. spent about $9.6 billion to buy back its own shares in the third quarter, a sign the company’s executives viewed the stock as undervalued. But declining insurance underwriting weighed on its operating earnings in a mixed quarter for the company.
That metric fell to $12.7 billion in the third quarter, a 5.8% decline from a year earlier, the Omaha, Nebraska-based conglomerate said Saturday in a statement. Insurance underwriting declined by 43%, as its auto insurer Geico faced an increase in losses and a surge in underwriting expenses over the period. The firm’s insurance net investment income also declined 14% to $2.7 billion, largely because of lower short-term interest rates.
Berkshire started buying back its own shares in the first quarter for the first time in more than a year, as Chief Executive Officer Greg Abel found the shares were trading below their “intrinsic value.”
Shares of Berkshire fell roughly 1% in the first nine months of the year, underperforming the S&P 500 — a gauge Warren Buffett often used to highlight the company’s performance. Since then, the stock has reached new heights, prompting questions over whether the firm would continue such buybacks. Its A share class has gained nearly 15% since then, versus a nearly 4% decline for the index.
Despite the buybacks, the firm’s cash pile rose from the previous quarter, totaling $377.4 billion at the end of September. After deducting of $20.5 billion in unsettled US treasury bill purchases, the firm’s cash stands at about $357 billion. Berkshire sold a net $426 million of equity holdings in the period.