Unlock the Editor’s Digest at no cost
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
Berkshire Hathaway’s money pile swelled to a document $189bn within the first quarter of 2024 as Warren Buffett’s sprawling conglomerate continued to dump shares, together with Apple, one among its largest positions.
The determine underscores the problem the billionaire investor and his workforce have had in looking for worthwhile investments, in addition to the relative attract of the excessive yield on US authorities debt.
The corporate on Saturday disclosed it had bought just below $20bn-worth of shares within the first three months of the yr, shopping for $2.7bn over the identical interval. In consequence the worth of its inventory portfolio slipped to $336bn, from $354bn at year-end.
The submitting with US securities regulators indicated that Berkshire had bought a good portion of its stake in Apple, which had change into a core holding for the Omaha-based enterprise since one among Buffett’s deputies first invested in 2016.
The corporate mentioned its place within the iPhone maker was value $135.4bn within the first quarter, down from $174.3bn on the finish of 2023, suggesting it had bought greater than 100mn shares within the firm in the beginning of the yr. Berkshire began to pare its holdings in Apple in late December, promoting roughly 10mn shares.
Buffett has lengthy heaped reward on Apple’s administration workforce and in 2022 he described the corporate as one among Berkshire’s “4 giants”, alongside its insurance coverage operations, the BNSF railroad and its vitality and utility enterprise Berkshire Hathaway Power.
The figures come as Berkshire shareholders collect in Omaha, Nebraska, for the corporate’s annual assembly, dubbed the Woodstock of capitalism. It’s the first time Buffett will take to the stage since his longtime enterprise accomplice Charlie Munger died in November.
Berkshire reported stable earnings within the first quarter, pushed nearly completely by enhancements in its insurance coverage companies in addition to a lift from larger rates of interest. Working earnings throughout the corporate jumped 39 per cent from the yr earlier than to $11.2bn.
The corporate disclosed that its auto insurer Geico had handed alongside larger charges to clients and had suffered fewer claims, lifting its outcomes. The unit has scaled again its footprint because the pandemic after it suffered a interval of losses.
Auto insurers throughout the US had struggled with the excessive alternative prices of latest automobiles, exacerbated by provide chain points and surging inflation.
Geico, which is led by one among Buffett’s high funding deputies, reduce tens of millions of insurance policies in a drive to return to profitability. The transfer has been profitable. Pre-tax earnings at Geico greater than doubled from a yr in the past to $1.93bn. The unit additionally signalled its retrenchment might be close to its finish, saying that “the speed of decline” had slowed and it was profitable new enterprise.
The corporate has additionally benefited from the US Federal Reserve’s resolution to boost rates of interest in a bid to quell inflationary pressures. Berkshire mentioned it earned $1.9bn within the quarter in curiosity revenue from its money pile, which is basically invested in short-term Treasuries.
Over the previous yr, it has earned nearly $7bn on that portfolio.
General, Berkshire mentioned it generated a web revenue of $12.7bn within the first quarter, down 64 per cent from $35.5bn a yr earlier.
Buffett has lengthy discouraged his shareholders from counting on the corporate’s web revenue figures — calling them “meaningless” — as they’re affected by swings in worth of its inventory portfolio from quarter to quarter. It can lead to big losses or earnings that don’t mirror the underlying enterprise efficiency.
