Warren Buffett’s company reported a sharp drop in profits on Saturday as the paper value of its investments fell, but tens of thousands of shareholders packed an Omaha arena to hear Buffett answer questions at the stadium. annual meeting Later, you can be encouraged by the fact that many of Berkshire Hathaway’s businesses have performed well.
Berkshire reported profit of $12.7 billion, or $8.825 per Class A share, for the quarter. That’s about a third of the $35.5 billion, or $24,377 per A share, that Berkshire reported a year ago.
But those numbers were heavily impacted by a significant drop in the paper value of Berkshire’s investments. That’s why Buffett urges investors to pay more attention to the conglomerate’s operating income, which excludes investment performance. By that measure, Berkshire’s operating profit jumped 39% to $11.222 billion from $8.065 billion last year as its insurance businesses performed well.
Three analysts surveyed by FactSet Research had forecast operating income of $6,701.87 per Class A share.
Buffett sold nearly $6 billion in shares during the quarter, including about 13% of Berkshire’s huge stake in Apple. The investment in the iPhone maker remains the largest in the $364 billion portfolio at $135.4 billion.
But the estimated value of Berkshire’s stake in Apple suggests that Buffett sold more than 100 million shares. Buffett said he invested in Apple stock because of how devoted consumers are to the iPhone and other Apple products.
Apple CEO Tim Cook, who attended Berkshire’s meeting, told CNBC he still considers it a privilege to have Berkshire as a major shareholder.
Berkshire reported underwriting profits for its insurers of $2.6 billion, up from $911 million a year ago.
BNSF Railway’s earnings did disappoint, falling 8% to $1.143 billion, but most of its other companies performed well, including a 72% jump in operating profit in the utility division, which added $717 million to Berkshire’s total.
Berkshire’s revenue for the quarter rose 5% to $89.87 billion. Two analysts providing FactSet estimates had forecast revenue of $87.044 billion.
With no major acquisitions in sight, Berkshire’s massive cash pile continued to grow to a record $188.993 billion in the quarter. Berkshire even spent $2.6 billion on share repurchases during the first three months of the year, but its companies, including Geico Insurance, BNSF Railway, several large utilities and dozens of others, continue to generate mountains of cash.
The main arena was three-quarters full within half an hour of doors opening on Saturday because people are always eager to glean tidbits of wisdom from billionaire Warren Buffett, who has nicknamed the gathering “Woodstock for capitalists.”
But this year is missing a key ingredient: this is the first meeting since Vice Chairman Charlie Munger. died.
For decades, Munger has shared the stage with Buffett each year for a marathon question-and-answer session that is the centerpiece of the event. Munger regularly let Buffett take the lead and gave detailed answers that lasted several minutes. Then Munger himself went straight to the point. He is remembered for calling cryptocurrencies stupid, advising people to “marry the best person who wants you” and comparing many unproven Internet businesses in 2000 to “turds.”
He and Buffett acted as a classic comedy duo, with Buffett offering long sets to Munger’s witty one-liners. Together, they transformed Berkshire from a failing textile mill into a huge conglomerate consisting of interests ranging from insurance companies such as Geico to the BNSF railroad, several large utilities and a number of other companies.
Munger often described Berkshire’s key success as “trying to consistently not be stupid, rather than trying to be very smart.” He and Buffett were also known for their commitment to a cause they understood well.
“Warren always did at least 80% of the talking. But Charlie was a great opponent,” said Stansberry Research analyst Whitney Tilson, who was looking forward to his 27th straight meeting with a heavy heart over Munger’s absence.
But the absence may well be an opportunity for shareholders to get to know better the two executives who directly oversee Berkshire’s companies: Ajit Jain, who runs the insurance division, and Greg Abel, who runs everything else. Abel will one day replace 93-year-old Buffett as CEO.
Morningstar analyst Greggory Warren said he hopes Abel speaks out more this year and allows shareholders to see some of the company’s brilliance. Berkshire Chiefstalk about. Since Munger let it slip away At the annual meeting three years ago, Buffett repeatedly stated that Abel would be his successor. reassured investorsthat he is confident in his choice.
Experts say the company has a strong culture based on integrity, trust, independence and an impressive line-up of managers ready to take over.
“Greg is a rock star,” said Chris Bloomstran, president of Semper Augustus Investments Group. “The bench is deep. At the meeting he will not have the same humor. But I think we all come here every year to be reminded of the need to be rational.”