Berkshire Hathaway, the conglomerate led by the legendary investor Warren Buffett, faced a challenging first quarter as its profits took a hit alongside a decline in the paper value of its investments. However, amidst the turmoil, the company revealed that most of the businesses it owns outright had actually performed quite well. The company reported a profit of $12.7 billion, or $8.825 per Class A share, in the quarter. This figure marked a significant drop from the previous year’s $35.5 billion profit, or $24,377 per A share. Despite this decline, operating earnings saw a healthy 39% jump to $11.222 billion, up from $8.065 billion the year before, driven by strong results from its insurance companies.
Buffett made headlines as a net seller of $17 billion in stocks during the quarter, with a notable reduction in Berkshire’s sizable Apple stake by approximately 13%. Despite the sell-off, Apple remains the largest holding in Berkshire’s $364 billion portfolio, with a value of $135.4 billion. The decision to trim the Apple position raised eyebrows among investors, as Buffett had previously highlighted his admiration for the tech giant due to its dedicated consumer base, reminiscent of the loyalty seen in Berkshire’s own beloved brands like See’s Candy. Apple’s CEO, Tim Cook, expressed gratitude for Berkshire’s continued support, even in the face of the recent stock sales.
Berkshire’s insurance segment saw a notable uptick, reporting a $2.6 billion underwriting profit compared to $911 million in the prior year. Geico, in particular, showed significant improvement in its results, contributing to the overall positive performance of the insurers within the conglomerate. Additionally, many of Berkshire’s other subsidiary companies delivered robust results, with the utility unit standing out with a remarkable 72% increase in operating profits, adding $717 million to Berkshire’s total earnings.
Despite the absence of major acquisitions on the horizon, Berkshire found itself in the enviable position of amassing a record cash pile of $188.993 billion by the end of the quarter. Even after deploying $2.6 billion to repurchase shares in the first three months of the year, the company’s cash reserves continued to grow. As Berkshire navigates through a challenging economic landscape, Buffett’s strategic moves and the performance of the conglomerate’s diverse portfolio remain under scrutiny, with investors eagerly awaiting the Oracle of Omaha’s next big bet.
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