Berkshire Profit Soars, Buffett Gains From Stock Holdings

Berkshire Hathaway on Saturday posted its highest-ever quarterly operating profit, while gains from stock holdings helped the conglomerate led by billionaire Warren Buffett swing to a nearly $36 billion overall profit.

Photo Insert: Rising interest rates, and better results at the Geico car insurer, allowed Berkshire's insurance businesses to generate more money in the second quarter, with profit up 38% and interest and other investment income growing sixfold.

Rising interest rates, and better results at the Geico car insurer, allowed Berkshire's insurance businesses to generate more money in the second quarter, with profit up 38% and interest and other investment income growing sixfold, Jonathan Stempel reported for Reuters.

But while operating profit topped $10 billion, those same rising rates have made it more costly to buy and upgrade homes, hurting results at Berkshire's Clayton Homes and building products businesses, and buy RVs from its Forest River unit, where revenue sank 34%.

Profit also fell at one of Berkshire's largest businesses, the BNSF railroad, with a 24% decline reflecting lower shipments of consumer goods, price competition from truckers, and higher pay for employees.

Berkshire also appeared to remain wary of high stock prices as U.S. equities extended their rally.

During the second quarter, it sold $8 billion more stocks than it bought and repurchased less of its own stock, and it ended June with a near-record $147.4 billion of cash.

"The story here is interest rates and valuations of stocks," said Jim Shanahan, an Edward Jones analyst with a "buy" rating on Berkshire.

"The earnings impact of higher interest rates on investment income is offsetting the economic softness caused by those same rates," he added. "And it's clear there aren't a lot of attractive investment opportunities out there."

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