Berkshire Hathaway reports second quarter strength
With the help of investing legend Warren Buffett, the publicly traded conglomerate Berkshire Hathaway (NYSE:BRK.A) has performed very well so far this year. Shares have moved to the upside by nearly 30% going into its second quarter results after the market close on Friday. Following the results shares rose slightly to the upside, 0.75%, on the back of a sharp rising in earnings.
Berkshire Hathaway reported a profit of $4.54 billion, or $2,763 per a Class A share, up from $3.11 billion, or $1,882 a share reported in the second quarter of last year. Revenue climbed 16% to $44.69 billion, the company reported top-line growth from its insurance operations, railroads, utilities and energy businesses. The revenue gains seen in its insurance business caught some analysts off guard considering the historically tough times for insurers. Low interest rates have kept interest bearing assets from producing meaningful levels of return.
The 46% jump in profit was a result of improvements within the company’s derivative and investments business segments. The company generated $300 million in derivative gains compared with tough losses amounting to $693 million a year ago. Gains within the investments segment nearly quadrupled on a year over year basis. Berkshire posted investment gains of $322 million during the quarter, compared with a gain of $81 million a year earlier. These gains were helped in large part to the broad market strength seen with the equity markets.
Buffett continued his pursuit of acquisition through a number of large and small deals. In June, the company was able to close the $23 billion acquisition of everyone’s favorite ketchup manufacture H.J. Heinz. Moreover, Buffett has targeted the energy sector through a couple acquisitions including a plan to buy Nevada utility NV Energy Inc. (NYSE:NVE) for roughly $5.59 billion. Following the announcement, it doesn’t appear the results are moving shares up nor down after the bell. Over the weekend the street will have some time to digest the quarter and it seems likely analysts will reaffirm their price target next week.
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