Warren Buffett’s Berkshire Hathaway reports loss as investments fall

Warren Buffett’s company has reported a nearly 13 billion dollar loss in the third quarter as the paper value of its investments fell, but the companies it owns – particularly the insurers – generally performed well.

Berkshire Hathaway said that it lost 12.8 billion dollars (£10.3 billion) in the quarter. That is significantly bigger than the 2.8 billion dollar (£2.2 billion) loss that it reported a year ago.

But most of those investment losses are unrealised because Berkshire did not actually sell most of its stocks with its biggest holding being a massive stake in Apple.

Accounting rules require it to include the value of its investments, which it put at 341.1 billion dollars (£275 billion) at the end of the quarter, in its earnings. Last quarter, it said its stock portfolio was worth 353 billion dollars (£285 billion).

That is why Mr Buffett has long said investors are better served focusing on Berkshire’s operating earnings, which exclude the value of its investments that can vary widely quarter to quarter.

By that measure, Berkshire said its operating profit jumped nearly 41% to 10.8 billion dollars (£8.7 billion). That is up from 7.65 billion dollars (£6.2 billion) a year ago.

Berkshire’s insurance unit was helped by relatively low losses related to major catastrophes such as hurricanes this year and a rebound in Geico’s profits.

Altogether, Berkshire’s insurers contributed 2.4 billion dollars (£1.9 billion) to its operating profit. A year ago, the insurers reported a 1.1 billion dollar (£888 million) loss in the third quarter.

In addition to insurers, the Omaha, Nebraska-based conglomerate owns BNSF railroad, several major utilities and an eclectic assortment of manufacturing and retail firms including aviation parts maker Precision Castparts, See’s Candy, Dairy Queen and Helzberg Diamonds.