Warren Buffett’s firm jump in profits

"Warren Buffet"

"Warren Buffet"The holding company run by US investor Warren Buffett has seen profits surge in the third quarter.

Berkshire Hathaway said net profit rose 29% to $5.05bn (£3.2bn) in the three months to September from the same period last year.

This was mainly down to its investments at the peak of the financial crisis in General Electric and Goldman Sachs, boosting it by $1.2bn.

Berkshire’s revenue grew 13% to $46.5bn.

In October 2008, Berkshire purchased warrants in GE and Goldman. Warrants are derivatives that allow the holder to buy shares or other assets from the issuer at a fixed price within a set period.

For example, Berkshire invested $5bn in Goldman at 10% interest and had the right to buy a further 43.5 million shares for $115 per share – less than Goldman is currently trading – on 1 October.

Berkshire exercised that right and has become a top-10 shareholder in the bank.

Berkshire owns about 80 companies including railway, clothing, furniture and jewellery firms, with its insurance and utility businesses typically accounting for more than half of the company’s net income.

It also has major investment stakes in companies such as Coca-Cola, the banking group Wells Fargo, and the computer maker IBM.

Earlier this year, ketchup-maker Heinz was bought for $28bn by Berkshire and Brazilian investment fund 3G Capital.

Mr Buffett is one of the world’s richest men.

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