Berkshire Hathaway’s operating earnings rose 11% in the second quarter of 2014 ($4.331 billion) vs. the second quarter of 2013 ($3.919 billion). Overall net earnings rose 41% ( $6.395 billion vs.$ 4.541 billion), but that result was driven largely by a realized gain from the tax-free exchange of shares in Graham Holdings. Operating earnings are more meaningful than net earnings for Berkshire, since realized gains and losses, as well as the valuation of its derivative contracts, are highly variable from quarter to quarter and do not provide a good indication of Berkshire’s performance.
The increase in operating earnings was driven by non-insurance businesses. Manufacturing, services, and retail realized a 29% increase in operating earnings. Within this category, operating earnings for manufacturing (Lubrizol, Iscar, Marmon, etc) rose 19%.
At the end of the second quarter, Berkshire held $55.5 billion in cash. This is is the first time that Berkshire’s cash position has exceeded $50 billion. Since Warren Buffett plans to hold $20 billion in cash to primarily cover insurance claims, he now has $35 billion available for one or more large acquisitions. He previously stated that he is seeking to acquire a $20 billion “elephant”.
Berkshire Hathaway’s 10-Q for the second quarter of 2014 is available at: