The conglomerate reported that third quarter operating earnings grew to $3.662 billion from $3.399 billion. That is a gain of 7.7%. Net earnings after items included securities sales and rose by a sharp 28.9% to $5.053 billion.
Operating earnings per share rose by 8.3% from a year ago to $2,228 per Class A share. The net earnings per share including gains rose by 29.5% to $3,074 per Class A share. We would point out that Mr. Buffett seems to have purchased at least some stock in the buyback plan because the average Class A shares outstanding were 1,643,779 at the end of the third quarter versus 1,652,184 a year ago.
A source of weakness was insurance underwriting, with earnings from operations down to $170 million from $392 million a year ago. Insurance investment income rose to $861 million from $733 million a year ago. The non-insurance businesses accounted for $2.783 billion of the total, up from $2.474 billion a year ago.
If you go back to the book value, that is doing well in 2013. Berkshire Hathaway’s shareholder equity has increased $20.7 billion and the Class A book value per share rose by 11.0% to $126,766 as of September 30, 2013.
We would point out that the closing price of $173,122.50 for its Class A shares is up 29.1% versus the $134,060 closing price of 2012. The September 30 closing price of $170,410 was up 27.1% from the end of 2012.
In short, the book value per share that Warren Buffett tells you to watch rather than any earnings report rose at 11% versus almost 30% gains in the stock. How can we not call that a serious disconnect, even if the gains of both are impressive?
Just to show how convoluted these earnings interpretations are, here is a snapshot of the headlines from Yahoo! Finance:
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