Berkshire Hathaway will announce its third-quarter financial report on Saturday, and the market's focus is far beyond just performance. Stock buybacks, cash reserve levels, and the size of Apple stock holdings will all be the focus of attention.

FactSet predicts $Berkshire Hathaway-A (BRK.A.US)$ that per share Class A stock revenue will decline by 1% to $7,335 (approximately $10.5 billion), slightly lower than the $7,436 in the same period last year. Berkshire set a historical record of $8,066 per share in the second quarter.

CEO Warren Buffett has always advised investors to focus on long-term returns rather than quarterly performance. Stock buybacks are particularly noteworthy because they often reflect Buffett's view on stock prices. This year, Berkshire's stock buybacks have been significantly reduced, with buybacks in the second quarter totaling only $0.345 billion, the lowest in over four years, compared to around $2.6 billion at the beginning of the year.

Berkshire's cash and equivalents reached $277 billion at the end of June, significantly higher than the $167 billion at the end of 2023. If the third quarter continues to grow, it may approach $300 billion, partly due to the company selling over $10 billion in Bank of America stocks. However, the substantial gains from selling Apple stocks may require Berkshire to pay over $15 billion in taxes, which could impact its cash reserves.

The market is still watching whether Berkshire will further reduce its holdings $Apple (AAPL.US)$In the second quarter of this year, Berkshire Hathaway has reduced its holdings of Apple by nearly 50%, to 0.4 billion shares. Apple is still Berkshire Hathaway's largest holding, with a market cap of around $93 billion, accounting for 30% of its $300 billion equity portfolio.

Berkshire's insurance business may come under pressure due to losses from natural disasters. UBS analyst Brian Meredith expects natural disaster losses to be around $1 billion, including losses caused by Hurricane Helen. In addition, Hurricane Milton early in the fourth quarter may bring Berkshire losses of about $2 billion.

In addition, Berkshire has about $15 billion in foreign currency debt, primarily in yen. When the US dollar depreciates, the book value of this debt rises, which could lead to a decrease in profits. Barron's estimates that the second-quarter loss from foreign exchange, after deducting taxes, could reach $1 billion, reversing the foreign exchange gains from the first half of 2023.

UBS analyst Meredith is more optimistic about performance expectations, expecting earnings per share to reach $8448. Barron’s forecasts that Berkshire Hathaway's book value will rise to about $440,000 per Class A share, a 5% increase from the second quarter, mainly driven by the rise in Apple and$American Express (AXP.US)$other equity portfolio.

Editor/rice