We recently got a glimpse at Berkshire Hathaway's (NYSE:BRK.A)(NYSE:BRK.B) third quarter earnings report, and while the business looks strong, there's one big number that stands out. Berkshire has $149 billion in cash on its balance sheet, the largest cash hoard in the company's history.
On a similar note, while Berkshire has made some relatively small stock purchases in its portfolio recently, it has spent more on a single stock in 2021 than on all others combined. In this Fool Live video, recorded on Nov. 8, Fool.com contributor Matt Frankel and Industry Focus host Jason Moser discuss what stock Berkshire has spent more than $20 billion on in 2021 and why the stockpile of cash keeps growing.
Jason Moser: Now, over the weekend, Matt, Berkshire Hathaway, as they do, released their earnings report and that's one that always just flies right under the radar because it's off hours, so to speak. There's not a whole heck of a lot of really going on with Berkshire. I mean, not a whole lot has changed, but you took a look at this report real quick. What are one or two things you feel like investors need to know from this quarter for Berkshire Hathaway?
Matt Frankel: Berkshire always releases its earnings on a Saturday, which is by design. They want to give the market time to digest it before it reacts. Berkshire's businesses are boring, which is why nobody really pays that much attention to it. They want to know what Berkshire did in its stock portfolio, which is a different report. Three key takeaways: operating earnings were up 18% for Berkshire operating businesses, year-over-year, some nice recovery from the pandemic. Berkshire's cash stockpile is at an all-time high now surprise, surprise. It seems like we say that every quarter.
Moser: Yeah. Buffett before has really talked about how cash just isn't where you want to be. Now you see where his cash balance is. It's just an interesting dissonant there.
Frankel: Don't get me wrong. I think having $149 billion of cash is a negative in times of inflation, like we're starting to see right now. That's losing five percent of its purchasing power a year right now. I wish he would do something with it. That's my biggest complaint about Berkshire right now.
But he is buying back Berkshire's own shares at the highest rates so far, Berkshire spent $7.6 billion on buybacks in the quarter, a little over $20 billion so far this year. But the third quarter buyback pace was a little greater than the first and second, and the cash stockpile still went up so that tells you how much money Berkshire's businesses really generate. But I'm happy to see them spending money on buybacks. I hope they continue to do that, especially if Buffett continues to think-- and I don't necessarily disagree that acquisitions are expensive right now. I hope he continues to pull the trigger on some buybacks.
Moser: Yeah. Well, I mean, he's buying stock. It's his own. Exactly. You can't fault him for that. I mean, I feel like if anyone knows that business, it's Warren and Charlie, so it seems like much more of the same year and Berkshire shareholders should be, I would think at least encouraged, feeling good about the big picture with this business.