Warren Buffett's conglomerate interrupted a beautiful Saturday by reporting quarterly earnings.
But we'll forgive him. Because Buffett's empire touches, well, just about everyÂ aspect of the U.S. business landscape (okay, maybe not esports...yet), checking outÂ Berkshire's quarterly reportsÂ gives us a window into the health of the economy.
Quick timeout:Â If you've never been to Berkshire's website before...here's a taste of what you can expect. Web developers, you might want to submit a rÃ©sumÃ©.
So...how'd it do?
At a high levelÂ—really darn well. Net income almostÂ tripled, but per Buffett, chalk that up to aÂ new accounting ruleÂ that requires you to include unrealized investment gains/losses in net income. Because Berkshire has so many investments, that number can fluctuate wildly.
Where youÂ shouldÂ be looking, he says, isÂ operating income, which jumped 67% (topping expectations).
Let's dive a little deeper:
Its freight rail businessÂ (BNSF Railway) surged due to "general economic growth" generating higher demand for consumer and industrial goods (sand, fertilizer, grain). InsuranceÂ (GEICO and others) also rebounded. Underwriting profit came in at $943 million, up from aÂ lossÂ of $22 million last year. One catalystÂ for all this growth was the corporate tax cut. In Q2, Berkshire paid an effective income tax rate of 20%, down from 28.9% last year. And then there's tech:Â Tech? Buffett? You bet. Buffett has been steadily increasing his position in Apple. Which, you may have heard, hit $1 trillion in market cap last week. Now, $47.2 billion of Berkshire's ~$180 billion stock portfolio isÂ invested in Apple.
Berkshire's other top holdings? American Express, Bank of America, Coca-Cola, and Wells Fargo. Bottom line, courtesy of one analyst:Â "Strength in Berkshire's portfolioÂ of energy, transportation, service, retailing, and manufacturing businesses...reflect(s) broad U.S. economic strength."
Most OnlineNewest Member