Berkshire Hathaway’s first quarter profits took a hit due to a decline in the paper value of its investments, with the company reporting a profit of $12.7 billion, or $8.825 per Class A share, significantly lower than last year’s $35.5 billion. However, the company highlighted that most of the businesses it owns outright performed well, with operating earnings jumping 39% to $11.222 billion. This figure surpasses analysts’ estimates and indicates a strong performance in the insurance sector.
Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, was a net seller of $17 billion in stocks during the quarter, including trimming the company’s massive stake in Apple by about 13%. Despite the reduction, Apple still remains the biggest holding in Berkshire’s portfolio at $135.4 billion. Buffett expressed confidence in Apple’s long-term prospects, citing consumer loyalty similar to brands like Berkshire’s See’s Candy. Apple CEO Tim Cook acknowledged Berkshire’s decision to sell shares, emphasizing the importance of having Berkshire as a major shareholder.
Berkshire reported a $2.6 billion underwriting profit at its insurers, with Geico leading the way in improving results. However, BNSF railroad’s profits experienced an 8% decline to $1.143 billion. The company’s many other businesses delivered solid results, including a 72% increase in operating profits at its utility unit. Overall revenue grew by 5% to $89.87 billion in the quarter, outperforming analysts’ estimates. Despite the lack of major acquisitions, Berkshire’s cash pile reached a record $188.993 billion, prompting Buffett to emphasize the importance of making impactful, low-risk investments.
With no immediate plans for major acquisitions, Berkshire’s focus remains on generating returns for shareholders through strategic investments and maintaining a disciplined approach to deploying its massive cash reserves. Buffett reiterated the company’s commitment to only pursuing opportunities that present minimal risk while offering significant potential for returns. The company’s diverse portfolio of holdings, including insurance, transportation, utilities, and various other businesses, continues to generate substantial cash flow and contribute to Berkshire’s overall financial stability.
Looking ahead, Berkshire Hathaway remains well-positioned to navigate market uncertainties and capitalize on opportunities that align with its long-term investment strategy. Despite the challenges posed by the ongoing pandemic and economic fluctuations, the company’s resilient performance in the first quarter reflects its ability to adapt and thrive in changing environments. Shareholders can expect Berkshire to continue its track record of delivering value and sustainable growth, guided by the expertise and vision of Warren Buffett and his team of seasoned professionals. As the company navigates the evolving landscape of the business world, Berkshire remains committed to upholding its reputation as a trusted leader in the investment community.
