Berkshire Hathaway: Record Third Quarter on Gain from Heinz


Nov. 9 2015, Updated 11:32 a.m. ET

Earnings hit, revenue misses

Berkshire Hathaway (BRK-B) reported its 3Q15 earnings on November 6. With operating income per share of $2,769, the company beat Wall Street analysts’ estimate for operating income per share estimates of $2,721 on the one-time gain of $4.4 billion from the merger of Kraft Foods and H.J Heinz (HNZ).

Berkshire Hathaway posted 3Q15 net income of $9.43 billion as compared to $4.62 billion in the prior year’s quarter. The company’s revenue rose by 15% to $59 billion, missing the analyst estimates of $61 billion.

Berkshire Hathaway teamed up with 3G Capital to buy ketchup maker H.J. Heinz. Investors initiated cost cutting in order to boost operating margins. Berkshire Hathaway together with 3G Capital purchased Kraft Foods through Heinz, resulting in a windfall gain of $4.4 billion for Berkshire Hathaway.

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Giant in investing

Berkshire Hathaway, with a market capitalization of more than $335 billion, is a holding company whose subsidiaries engage in diverse business activities across sectors. The following are the major businesses where its subsidiaries operate:

  • insurance and re-insurance
  • freight rail transportation
  • utilities and energy
  • finance
  • manufacturing
  • service and retail

The firm’s investments are made and managed primarily by its chairman and CEO, Warren Buffett, and by its vice chairman, Charles Munger.

Warren Buffett purchased Berkshire Hathaway in 1965. At that time, the firm was part of the textile business. Since then, the company has gone through several transformations and is now engaged in the buying and managing of businesses.

Major businesses

Berkshire Hathaway owns major companies across sectors in and outside of the United States. Here are some of its major subsidiaries:

  • GEICO – an underwriting insurance and re-insurance company
  • General Re and the Berkshire Hathaway Reinsurance Group – two of the largest re-insurers in the world
  • Burlington Northern Santa Fe – BNSF operates one of the largest railroad systems in North America
  • Berkshire Hathaway Energy Company – BHE is an international energy holding company that owns a wide variety of operating companies engaged in the generation, transmission, and distribution of energy

Berkshire Hathaway competes with asset managers and insurance players (XLF) such as American International Group (AIG), Metlife (MET), and BlackRock (BLK).


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