Warren Buffett's Berkshire Hathaway Inc has been shifting its shareholdings into raliroads and other utilities businesses and the move has paid off for the hedge fund firm.
In a recent report, the firm's earnings from Burlington Northern Santa Fe and MidAmerican Energy Holdings had amounted to USD1.46 billion or 40% of operating income for the firm for the third quarter of 2013. This was reported by the Omaha, NB based firm last November 1 in its regulatory filings. The two businesses have generated nearly 30% profit each year since its acquisition back in 2010.
In 1999, Buffett entered into a deal to purchase MidAmerican Energy Holdings and this was the watershed moment for the firm in its shift into regulated business enterprises that had required large amounts of capital expenditures. Before that, Berkshire had invested in insurance operations, which provided its head with cash for takeovers and stock picks in exchange for risks that can result in wipeouts of earnings for some quarters for certain firms.
The profits from underwriting for insurance businesses fell 57% to USD170 million in the quarter ending September 30 from 2012. The recent hailstorms in Europe increased pressure on General Re while payouts had increased for Geico.
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