In a Form 10-Q filing released after the market closed today, Berkshire Hathaway reported an increase in third quarter operating earnings of 6.6%, as results improved in its manufacturing and energy businesses, but declined in its insurance and railroad operations. Net earnings, which include investments and derivatives, declined by 23.7%. Warren Buffett has stated that since one time capital gains or losses from investments, and valuations of derivatives, vary greatly from quarter to quarter, one should focus instead on operating earnings.
At the end of the third quarter, Berkshire had a cash position of $85 billion, far in excess Warren Buffett’s goal of $20 billion. Berkshire also reported a book value per A share of $163,783. At today’s closing price of 214,545, Berkshire is selling at a price to book value ratio of 1.3. Warren Buffett has set a target of buying back shares of Berkshire at a price to book value ratio below 1.2.