Warren Buffett’s Berkshire Hathaway Reports 14% Decline in Q1 Operating Profits
Berkshire Hathaway, the conglomerate led by legendary investor Warren Buffett, reported a 14% decline in first-quarter operating profits, totaling $9.6 billion. The company’s financial results, released ahead of its highly anticipated annual meeting in Omaha, revealed significant challenges in its insurance underwriting division.
The insurance underwriting segment experienced a substantial 49% year-on-year profit drop, falling to $1.4 billion. This decline was the primary factor contributing to the overall decrease in operating profits.
In a notable shift, Berkshire Hathaway continued its trend of being a net seller of stocks for the tenth consecutive quarter. The company sold a net $1.5 billion of stocks, purchasing $3.2 billion while divesting $4.7 billion. However, these sales were considerably smaller compared to the previous year, which saw $134 billion in net stock sales.
Despite the challenges, Berkshire’s cash reserves reached a record high of $348 billion, increasing by 4%. After accounting for Treasury purchase payables, the cash pile stands at $333 billion, surpassing the market capitalizations of major companies like Bank of America and Coca-Cola.
The company’s substantial cash reserves come amid a lack of significant investment opportunities. Berkshire did not repurchase any of its own shares last quarter, marking three consecutive quarters without buybacks. High valuations across public stocks, private businesses, and Berkshire’s own shares have limited potential investments.
Interestingly, Berkshire Class B shares have risen 20% this year, reaching all-time highs of approximately $540. This performance stands in contrast to the broader S&P 500 index, which has declined 3% due to market turmoil related to tariff concerns.
Investors appear to view Berkshire as a safe haven in uncertain times, betting on Buffett’s ability to capitalize on potential market downturns. As shareholders gather for the annual meeting, many will be eager to hear Buffett’s insights on the current economic landscape and Berkshire’s strategy moving forward.
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