Berkshire's profit plunges 64% on portfolio holdings as Buffett it sells Apple
Berkshire Hathaway says its first quarter profit plummeted on the paper value of its investments
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Berkshire Hathaway's first quarter profits plummeted along with the paper value of its investments, but the company said Saturday that most of the businesses it owns outright performed well.
The company reported reported a $12.7 billion profit, or $8.825 per Class A share, in the quarter. That’s roughly one-third of last year's $35.5 billion, or $24,377 per A share.
The figures were heavily influenced by a large drop in the paper value of Berkshire’s investments. Buffett encourages investors to pay more attention to the conglomerate’s operating earnings that exclude the investment figures. Operating earnings jumped 39% to $11.222 billion from last year’s $8.065 billion as its insurance companies showed strong results.
On a per share basis, this year's first quarter operating figure amounts to $7,796.47 per Class A share, beating three analysts' estimates by FactSet Research, who predicted $6,701.87 per Class A share.
Buffett was a net seller of $17 billion in stocks during the quarter, including trimming about 13% of Berkshire’s massive Apple stake. At $135.4 billion, the iPhone maker still accounts for the biggest share of Berkshire's $364 billion portfolio. Buffett said he expects it to remain so even up to when his successor Greg Abel takes over.
The estimated value of Berkshire’s Apple stake suggests Buffett sold off more than 100 million shares. In the past, Buffett has said he invested in Apple’s stock because of how devoted consumers are to the company's products, similar to consumer brands he loves like Berkshire's own See's Candy.
Apple CEO Tim Cook, who is at the Berkshire meeting, told CNBC that he still considers it a privilege to have Berkshire as a major shareholder, and he knew about the sales before Berkshire disclosed them Saturday.
Berkshire reported a $2.6 billion underwriting profit at its insurers, up from $911 million a year ago, as Geico in particular continued to improve its results. However, BNSF railroad’s profits dropped 8% to $1.143 billion.
Most of Berkshire's many other companies delivered solid results, including a 72% jump in operating profits at the utility unit, adding $717 million to Berkshire’s total.
Revenue grew 5% to $89.87 billion in the quarter. The two analysts who reported estimates to FactSet predicted $87.044 billion.
With no major acquisitions in sight, Berkshire’s cash pile climbed to a record $188.993 billion even after it spent $2.6 billion repurchasing shares during the first three months of the year. Holdings including Geico insurance, BNSF railroad, several major utilities and an assortment of dozens of others keep generating mountains of cash.
“We’d love to spend it but we won’t spend it unless we’re doing something with very little risk that will make us a lot of money,” Buffett said.