What trade war?
Berkshire Hathaway Inc. (BRK.A) (BRK.B) is marching along as if there are no economic or political disputes in the world to disrupt its growth.
The shares jumped 2.3% on Monday after the company reported a 67% increase in profit in its second quarter.
"Going forward, Berkshire Hathaway sales will follow U.S. GDP, which will probably be positive in 2019-2020," says Doug Kass, regular Real Money contributor and founder of hedge fund Seabreeze Partners Management Inc.
The results are surprising given 28% of the company's operating profits come from railroads, utilities and energy -- sectors that have posted uneven results and face some political and economic uncertainty.
Total earnings from these sectors was $1.9 billion, the second biggest after "other businesses" category.
In the first six month of 2018, the company's operating profit from railroad, utilities and energy rose 23% to $3.6 billion compared to a year before.
Still, beyond these numbers, there are few details from the company itself.
"Berkshire does not provide much transparency or clarity on specific sector exposure -- so we don't know the role of either coal or China on the overall results," Kass noted.
Berkshire's Relative Strength Indicator crossed into overbought territory on August 3.
BNSF Railway, a subsidiary of Berkshire Hathaway, benefited from higher shipping demand in the second quarter. The consumer volumes were up 5%, driven by "economic growth, tight truck capacity leading to conversion from highway to rail, as well as strength in imports" according to the company statement.
The volumes of industrial products gained 10% and agricultural volumes were up 9% in the second quarter, according to a company filing.
PacifiCorp, another subsidiary, is a legacy utility business founded in 1920 that still derives a chunk of its business from coal.
The overall health of the economy and the health of its chairman Warren Buffett, who is 87, are among the company's primary risks.
"While the company's balance sheet strength is unmatched, the earnings are diversified, and it has high exposure to defensive industries, Berkshire's earnings have meaningful sensitivity to the U.S. economy, and a major recession is a risk," said Sarah DeWitt of J.P. Morgan in a note on Monday.
