What to Watch as Berkshire Hathaway Reports Its Latest Q3 2024 Results

TradingKey - The world’s greatest investor is widely regarded as Warren Buffett. The 94-year-old is seen as the father of “value investing” in the modern era. He also happens to be Chairman and CEO of conglomerate Berkshire Hathaway Inc (NYSE: BRK.B), one of the biggest companies in the world.

Buffett has also endeared himself to investors globally due to his unique insights and witty takes on business matters of the day. Indeed, the annual Berkshire Hathaway shareholders meeting is a pilgrimage of sort for the investment world – with enthusiastic Berkshire (and Buffett) fans from around the globe making the trek to Omaha, Nebraska in the US, where the company is headquartered.

Buffett’s conservative approach to investing has also resulted in a wildly successful track record. The company’s quarterly earnings are eagerly watched and Berkshire is one of the only companies that releases its numbers after the market close on Friday or early over the weekend (on a Saturday).   

That’s no different this year as the company is set to report its Q3 2024 results on Saturday. Here’s what investors should be watching with Berkshire’s latest numbers. 

Will cash levels rise further?

Typically, Berkshire Hathaway’s businesses don’t attract too many headlines quarter to quarter given their stability and consistency. That’s because the conglomerate owns companies like insurer Geico, BNSF Railway, and Coca-Cola Co (NYSE: KO).

As a result, the biggest focus for investors in recent quarter has been the cash levels of Berkshire and how much cash it has on the balance sheet. Last quarter (for Q2 2024), the company surprised many investors by being a net seller of stocks for a seventh straight quarter.

Indeed, Berkshire sold more than US$75 billion worth of its stock holdings in Q2 2024 and ended the period (30 June 2024) with a record cash pile of US$277 billion – up strongly from the previous record of US$189 billion that was set in Q1 2024. 

One of the main reasons for that massive jump was that Buffett decided to sell nearly half of Berkshire’s stake in iPhone giant Apple Inc (NASDAQ: AAPL) in the second quarter of this year. It was a stake that Buffett started to accumulate in Apple back in 2016. Whether there’s any more disclosures on further selling of Berkshire’s Apple stake during Q3 2024 will be closely watched as well. 

Stock buybacks and operating earnings on the agenda

Typically, Berkshire’s management encourages investors to look at the firm’s operating earnings as a measure of its success versus just “net profit”. In Q2 2024, Berkshire recorded an impressive US$11.6 billion in operating earnings, up from 15% year-on-year from the year-ago period.

Geico, one of the conglomerate’s key contributors to the bottom line, delivered nearly US$1.8 billion in underwriting earnings for Q2 2024, up more than 200% from the US$514 million in the same period a year ago.

Investors will also be watching the buyback level of stock for Berkshire as the company famously does not pay a dividend and favours buybacks. However, Buffett has said previously that Berkshire would only carry out buybacks at a level that it believes offers value to shareholders.

In Q2 2024, Berkshire bought back US$345 million of its own stock but that was significantly down from the US$2 billion that was bought back in each of the prior two quarters (Q4 2023 and Q1 2024). Investors may be left disappointed as Berkshire’s share price has risen over 13% since the end of Q2 2024 to the end of Q3 2024.

Alongside record highs for the S&P 500 Index, that may indicate that Berkshire isn’t going to be too willing to repurchase its own stock in any sizeable amount. So far in 2024, Berkshire stock is up 24.4% and is outperforming the S&P 500’s 20.3% gain over the same period.