OMAHA, Neb. (AP) – Warren Buffett’s Berkshire Hathaway reported a sharp decline in profits Saturday as the paper value of its investments plummeted and it pared down its holdings in Apple.Despite this, tens of thousands of shareholders I was looking forward to hearing directly from Mr. Buffett.It was helped by soaring results at many of the companies that Berkshire directly operates.
Berkshire reported first-quarter earnings of $12.7 billion, or $8.825 per Class A share, down 64% from $35.5 billion, or $24,377 per Class A share, a year ago.
Buffett advises investors to pay more attention to a conglomerate’s operating income, which excludes the amount invested. Operating income increased 39% to $11,222 million ($7,796.47 per Class A share), driven by the insurance company’s strong performance.
By this measure, Berkshire beat the expectations of three analysts surveyed by FactSet Research, who expected operating earnings per Class A share of $6,701.87.
As part of the stock sale, Buffett sold about 13% of Berkshire’s massive Apple stake. The iPhone maker’s holding remains Berkshire’s largest stake, accounting for $135.4 billion of the company’s $364 billion portfolio. Buffett said he expects Apple to remain his top investment for many years, even if his eventual successor, Greg Abel, takes over.
As for Berkshire’s core insurance business, the conglomerate reported that the insurer’s underwriting profit was $2.6 billion, up from $911 million in the year-ago period.
BNSF Railway’s profits fell 8% to $1.143 billion, while most of Bershire’s other companies saw a 72% increase in operating profit in their utilities division, with revenue of $717 million. The company achieved solid results with an increase in sales.
Cash on hand for the quarter increased to a record high of $188,993 million.
“We’d love to spend money, but we won’t spend money unless we do something that has little risk and will make us a lot of money,” Buffett said.
Thousands take part in ‘Woodstock for Capitalists’
Tens of thousands of people filled the venue, eager to glean some wisdom from Mr. Buffett, who famously dubbed the event “Woodstock for Capitalists.”
But this year, a key element is missing: It will be the first meeting since Vice Chairman Charlie Munger. died.
The meeting was accompanied by a video tribute highlighting some of his most famous quotes, including classic lines such as “If people didn’t make mistakes so often, we wouldn’t be so rich.” It started with The video also features classic skits investors have done with Hollywood stars over the years, including a “Desperate Housewives” parody in which one of the women introduces Munger as her boyfriend. It also includes parodies such as , and actress Jamie Lee Curtis falling in love with Munger.
After the video ended, the arena erupted into a long standing ovation for Munger, whom Buffett called “the architect of Berkshire Hathaway.”
Buffett said Munger remained curious about the world until the end of his life at age 99, attending dinner parties, meetings and regular Zoom calls.
“Like his hero Ben Franklin, Charlie wanted to understand everything,” Buffett said.
For decades, Munger and Buffett functioned as a classic comedy duo, with Buffett providing lengthy setups for Munger’s witty one-liners. He once called unproven internet companies “bastards.”
Together, the two transformed Berkshire from an ailing textile mill to a diverse group of stakeholders ranging from insurance companies such as Geico to BNSF Railway, several major power companies and various other businesses. turned into a huge conglomerate.
Mr. Munger often summed up the key to Berkshire’s success as “rather than trying to be extremely smart, we try not to be consistently stupid.” He and Buffett were also known for sticking to businesses they understood well.
“Warren was always doing at least 80 percent of the conversation, but Charlie was a great foil,” said Stansberry Research analyst Whitney Tilson, looking forward to her 27th consecutive meeting with him. was.
next generation leaders
But Mr. Munger’s absence leaves shareholders with two executives directly overseeing Berkshire’s companies: Ajit Jain, who runs the insurance division, and Mr. Abel, who is in charge of everything else and has been named Mr. Buffett’s successor. An opportunity arose to find out more. Abel and Jayne shared the main stage with Buffett for the first time this year.
The first time Buffett asked Abel a question, he mistakenly answered, “Charlie?” Mr. Abel dismissed that mistake and moved on to the challenges faced by utilities due to the increased risk of wildfires and the reluctance of some regulators to collect reasonable profits.
Morningstar analyst Gregory Warren said he hopes Mr. Abel will be more vocal this year and give shareholders a glimpse of his brilliance. Berkshire executives talk about.
“Greg is a rock star,” said Chris Blomstran, president of Semper Augustus Investment Group. “The bench is deep. He won’t have the same humor in meetings. But I think we all come here every year to remind ourselves to be reasonable.”
From what to what
As usual, Buffett covered a variety of topics on Saturday, but he didn’t discuss politics or reveal what he was buying. The stocks he has purchased over the past year will remain secret until required to be disclosed in his filing.
He described a recent disturbing experience with artificial intelligence, saying he saw a fake image of his own voice delivering a message about something he had said he would never say. He predicted the technology would be a boon for fraudsters, but said he didn’t know if it would do more good than harm. The fake video was so convincing that Buffett said he may have sent the money to himself overseas.
“It has so much potential for good and so much potential for harm, but I don’t know how it’s going to play out,” he said.
On climate change, Jain said climate change is causing big losses for insurance companies and pushing up prices. It’s difficult to know whether prices have risen enough to address the risks, but at least insurers have the opportunity to readjust their premiums each year, Jain said.
“We get a lot of letters from people who are concerned about climate change, and I don’t think they’re wrong,” Buffett said. “But they don’t understand the insurance business.”
Mr. Buffett said Berkshire’s system, in which all non-insurance companies report to Mr. Abel and insurance companies report to Mr. Jain, has worked well overall. The 93-year-old said he receives fewer calls from his manager now that he is getting more guidance from Abel and Jayne.
“If something were to happen to me, this place would perform very well the next day,” Buffett said. ___
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