Berkshire Hathaway posts loss while cash pile grows to $157B

Warren Buffett's Berkshire Hathaway (BRK-A, BRK-B) reported its first quarterly loss in a year while operating earnings jumped by 40% and the firm's cash reserves reached a record $157.2 billion. The quarterly loss has been heavily attributed to the company's stake in Apple (AAPL).

Yahoo Finance’s Seana Smith and Brad Smith report on Berkshire Hathaway's third-quarter earnings and weigh in on what analysts are saying about the market's impact on profit margins.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video transcript

BRAD SMITH: Warren Buffett's Berkshire Hathaway posted its first quarterly loss in a year, but the company did see a 40% jump in operating earnings as it sets on a-- sits on a record $157.2 billion in cash. The Oracle of Omaha's company reported an investment loss of $24.1 billion in the third quarter, led by its big stake in Apple here.

OK. So if you were taking a look at these results over the weekend, you would be guided to one of the most cut and dry minimalist investor relations pages you have ever seen in your life for Berkshire Hathaway. But all in, there are some great nuggets in there.

First and foremost, when you think about Warren Buffett and Charlie Munger and this company and the number of holdings that they have as well here, this has been an interesting year for how they navigate the stock market. And remember Berkshire Hathaway and Warren Buffett, he's the first to admit that he is not the most-- he didn't jump at some of the biggest tech trades that they have made.

Now, look at their position in Apple. And so all of that considered, you've been looking across some of those names that have been able to find themselves within that Magnificent Seven, where sure, Buffett has some of those holdings, but at the same time if we did and continued to see over the past few months at this point, that slippage in the stock market, that's directly going to be impacting where their own not just cash pile moves towards, but where ultimately, some of those equity investments lose some of the value as well.

SEANA SMITH: Yeah, exactly. And I think the big takeaway, at least for me, from this report was that record cash amount that they had, 157 billion, really shows two things. One obviously, how Berkshire is positioned amongst many of his rivals. But two, just the fact that simply put, there's not a lot of attractive opportunities out there, at least in terms of what Warren Buffett and his team are seeing.

So when you take into account, I guess, how Berkshire is positioned among some of those rivals, they should even think be able to better weather some of the challenging times ahead, given the fact that their company is so diverse. They have many diverse revenue streams here, so that would be able to buoy it maybe a little bit better than some of its other competitors out there.

But when you take a look at some of the analyst reaction to this CFRA's analyst, Cathy Seifert, saying that the firm's margins, they were bolstered by a turnaround in insurance underwriting profitability, particularly at Geico. She talked about the pullback in ratings and ad spending, which helped drive that return to profitability.

And then going forward, talking about improving margins atop the strong top line growth, that's going to potentially be a catalyst here for shares going forward. We're seeing some of that play out. But like many investors when they look at earnings reports from Berkshire Hathaway, they obviously want to see them as we look ahead to the annual meeting as well. They obviously, want to know what Warren Buffett thinks of the current environment right now, where he's seeing opportunity.

And when you talk about diversifying your portfolio, what he sees as attractively valued right now in terms of what that could then look like 3 to 5, 10 years from now.

BRAD SMITH: We just had on Brooks Running, owned by Berkshire Hathaway. Last week, the CEO Jim Webber told us that Warren Buffett has his own sneaker. He's got his own Brooks running shoe. I didn't know that.

SEANA SMITH: I did not know that either.

BRAD SMITH: Yeah. Yeah. I got to get my hand on those.

SEANA SMITH: Did you see a picture of it?

BRAD SMITH: I didn't see a picture. I should have asked for a photo.

SEANA SMITH: So you're a sneaker head.

BRAD SMITH: It sure does exist.

SEANA SMITH: I was going to ask you if you would be in the market for that.

BRAD SMITH: Why not. Yeah, 100% absolutely.