It’s good news to start the day for the thousands of shareholders who will pack an arena on Saturday to listen to Warren Buffett and a number of other top executives at the conglomerate field questions for hours on end. The company said its first-quarter profits rose along with the paper value of its investment portfolio.
Chloe Lin, who travelled from Singapore to attend the conference for the first time and learn from Buffett and his longtime investment partner Charlie Munger, said, “It’s a once in a lifetime opportunity.”
A large crowd of admirers of the two investors who attend Berkshire’s shareholders meeting each year come to listen to whatever pearls of wisdom they may have to contribute about current affairs and lessons learned from life. Some people in the audience feel compelled to attend now while both guys are still around because both men this year are in their 90s.
“Charlie Munger is 99. I just wanted to see him in person. It’s on my bucket list,” Wu said. “I have to attend while I can.”
In the first quarter, Berkshire Hathaway reported revenue of $35.5 billion, or $24,377 per Class A share. That is more than 6 times the $5.58 billion, or $3,784 per share, from the previous year.
However, Buffett has long issued a warning that Berkshire’s bottom line numbers may be deceptive because to the large swings in the value of its investments, the majority of which it seldom sells, which skew the earnings. Berkshire only sold $1.7 billion worth of equities during this quarter, but it saw a $27.4 billion return on paper investments.
A $2.4 billion rise resulting from Berkshire’s intended acquisition of the majority of the shares of Pilot Travel Centres truck stop firm in January was one of this year’s investment wins.
According to Buffett, a better indicator of Berkshire’s profitability is operational earnings that do not include investments. According to that metric, Berkshire’s operational earnings increased by over 13% to $8.065 billion from $7.16 billion a year earlier.
Berkshire was predicted to announce operating earnings of $5,370.91 per Class A share by the three analysts FactSet polled.
Compared to the first quarter of last year, when Buffett disclosed that he had gone on a $51 billion spending binge at the beginning of the previous year, buying stocks like Occidental Petroleum, Chevron, and HP, this year’s first quarter was rather quiet.
With the exception of a few more Occidental acquisitions, Buffett’s buying tapered for the remainder of the year.
Berkshire held $130.616 billion in cash at the end of the first quarter of this year, up from $128.585 billion at the end of the previous year. However, Berkshire did spent $4.4 billion on its own stock repurchases during the quarter.
This year’s large new stock investments were not disclosed in the quarterly report. Nevertheless, the majority of Berkshire’s diverse array of businesses did well despite worries that a recession may be on the horizon.
Geico’s performance rebounded to help Berkshire’s insurance division, which also comprises a number of sizable reinsurers and Geico, generate an operating profit of $911 million, up from $167 million the year before.
Higher premiums and a decrease in claims and advertising expenses were advantageous to Geico.
Nevertheless, Berkshire BNSF railway and its sizable utilities subsidiary reported decreased profitability. After losing a significant client, BNSF’s earnings fell from $1.37 billion to $1.25 billion as shipments fell 10% and imports lagged at West Coast ports.
The utilities division’s $416 million addition was less than the $775 million of last year.
Besides, those major businesses, Berkshire owns an eclectic assortment of dozens of other businesses, including a number of retail and manufacturing firms such as See’s Candy and Precision Castparts.