Buffet Sees Profits Triple for Berkshire Hathaway

After a disappointing 2008 for Berkshire Hathaway, its performance last year was its worst since Mr Buffet, frequently known as the "Oracle of Omaha" or the "Sage of Omaha", acquired the company in 1965, the third quarter profits of $3.24 billion represent a spectacular recovery. The Financial Times notes that the profits recorded by Berkshire Hathaway, the company is headquartered in Mr Buffet's hometown of Omaha, Nebraska, exceeded those announced for the quarter by Goldman Sachs, a bank in which Mr Buffet is an investor. Improving stock markets and gains from derivatives, Mr Buffet once described derivatives as “financial weapons of mass destruction”, have been key to Berkshire Hathaway's strong performance. In addition to Goldman Sachs, Berkshire Hathaway, the owner of over 60 subsidiaries, has invested heavily too in companies such as American Express, Wells Fargo and The Coca-Cola Company. The stocks of those companies have performed well in recent months, helping the company that was Warren Buffet's first major acquisition to its impressive profits. The London Times reports that Berkshire Hathaway is the largest investor in the U.S. food group Kraft, currently attempting to acquire the British chocolate group Cadbury, and the paper suggests that Mr Buffet will be keeping a keen eye on the developments surrounding that possible takeover. Last week also saw an announcement from Mr Buffet that he had just been involved in his biggest ever deal. The actual amount of his investment in the U.S. railroad operator Burlington Northern Santa Fe may be slightly unclear - the Financial Times says $26.4 billion, the London Times has the investment at $34 billion, whilst Bloomberg reports that the latest amount invested is $26 billion, with the overall investment in the railroad being $44 billion - but the deal seems to signal Mr Buffet's increasing confidence in the U.S. economy. There are two downsides to the deal for Burlington Northern Santa Fe. Firstly, some of the major credit rating agencies are reviewing the ratings they have given to Berkshire Hathaway as they fear it may be over-exposed to continuing economic weakness, with half of the deal being funded by borrowings. Secondly, a pension fund in New Orleans is starting legal proceedings because it believes that the directors of Burlington were in breach of their fiduciary duties by virtually forcing shareholders to accept the deal. A quiet hurricane season contributed to lower claims and healthy profits at the insurance companies owned by Berkshire Hathaway. However businesses such as NetJets, the Ohio-based business jet operator, performed poorly. Revenue in the third quarter for Berkshire Hathaway stood at $29.9 billion, with the company's book value now standing at $126.07 billion, a value which equates to $81,247 per share. That book value has increased 10 percent from the previous quarter and 15 percent from the end of the previous year.