Berkshire Hathaway Sees Huge Profits

Warren Buffett

Under Chairman Warren Buffet, Berkshire Hathaway (NYSE:BRKA) is flourishing once again. Reuters recently reported that the company experienced a 46 percent increase from last year for second-quarter profits.

According to a regulatory filing from the company, Berkshire had its income increase to $4.54 billion, which is a big increase from the $3.11 billion it was last year. Berkshire has a variety of investments in different industries including jewelry, clothing, and furniture companies as well as a large investment in Coca Cola (NYSE:KO) and Wells Fargo (NYSE:WFC).

The company has benefited from an increase in the estimated value of their  investments and derivatives. According to USA Today, these same investments cost Berkshire a $612 million loss last year, but garnered $622 million in profit this year.

One of the reasons for this huge swing is due to how the company has to report derivatives, says USA Today. Berkshire has to estimate the value of derivative contracts every time it calculates earnings, even though the derivatives are not going to mature for several years.

The railroad the company has invested in, Burlington Northern Santa Fe, contributed to the company’s profits by climbing 10 percent. In recent years, Warren Buffet has invested more in railroads and other companies that have tied Berkshire’s performance to the economy’s well-being.

Although its insurance investments did not do as well as they did last year, Berkshire’s manufacturing, retail, and service investments saw increased earnings from $0.04 billion to $1.07 billion. These increased earnings are indicative of a healthier economy. As Reuters reported analyst Meyer Shields saying, “As America goes, so goes Berkshire.”

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