May 18, 2024

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Warren Buffett’s Berkshire Hathaway reports a sharp decline in profits

Warren Buffett’s Berkshire Hathaway reports a sharp decline in profits

OMAHA, Neb. (AP) — Warren Buffett’s Berkshire Hathaway reported a sharp drop in earnings Saturday as the paper value of its investments fell and it trimmed its Apple holdings. However, tens of thousands of contributors Looking forward to hearing from Buffett directlysupported by a jump in the performance of several companies in which Berkshire directly operates.

Berkshire reported earnings of $12.7 billion, or $8,825 per Class A share, in the first quarter, down 64% from $35.5 billion, or $24,377 per Class A share a year ago.

Buffett encourages investors to pay more attention to the group’s operating profits that exclude investment numbers. Operating profits jumped 39% to $11.222 billion, or $7,796.47 per Class A share, led by strong performance from insurers.

By that measure, Berkshire beat the expectations of the three analysts surveyed by FactSet Research, who expected operating earnings of $6,701.87 per Class A share.

As part of Buffett’s stock sales, he trimmed about 13% of Apple’s massive stake in Berkshire. Holdings in the iPhone maker remain Berkshire’s largest stake, making up $135.4 billion of the company’s $364 billion portfolio. Buffett said he expects Apple to remain the largest investment for years, even when his successor Greg Appel eventually takes over.

As for Berkshire’s core insurance business, the group reported underwriting profits of $2.6 billion at its insurance subsidiaries, up from $911 million last year.

BNSF Railroad profits fell 8% to $1.143 billion, but most of Bershire’s several other businesses posted strong results, including a 72% jump in operating profits at the utilities unit that added $717 million to earnings.

Available cash rose to a record $188.993 billion in the quarter.

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“We would like to spend it but we won’t spend it unless we do something with very little risk that will make us a lot of money,” Buffett said.

Thousands attend Woodstock for Capitalists event

Tens of thousands filled the arena, eager to glean wisdom from Buffett, who dubbed the meeting “Woodstock for capitalists.”

But there’s a key element missing this year: It’s the first meeting since Vice Chairman Charlie Munger He died.

The meeting opened with a tribute video highlighting some of his most famous quotes, including classics like “If people weren’t wrong so often, we wouldn’t be so rich.” The video also featured classic skits investors have done with Hollywood stars over the years, including a “Desperate Housewives” parody in which one woman introduced Munger as her boyfriend and another in which actress Jamie Lee Curtis swoons over him.

As the video ended, the arena erupted with a standing ovation honoring Munger, whom Buffett called “the architect of Berkshire Hathaway.”

Buffett said Munger remained curious about the world until the end of his life when he was 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 served as a classic comedy duo, with Buffett providing extended setups of Munger’s witty monologues. He once referred to unproven Internet companies as “stupid.”

Together, the pair transformed Berkshire from a struggling textile mill into a massive conglomerate made up of a diverse array of interests, from insurance companies like Geico to the railroad BNSF to several major utilities and a variety of other companies.

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Munger often summarized Berkshire’s major success as “trying to always not be stupid, rather than trying to be very smart.” He and Buffett were also known for their commitment to businesses they understood well.

“Warren has always done at least 80% of the talking. But Charlie has been a huge letdown,” said Whitney Tilson, a Stansbury research analyst, who was looking forward to his 27th straight meeting.

The next generation of leaders

However, Munger’s absence has created space for shareholders to get better acquainted with the two executives who directly oversee Berkshire’s businesses: Ajit Jain, who runs the insurance units, and Abel, who handles everything else and has been named Buffett’s successor. Abel and Jane shared the main stage with Buffett for the first time this year.

The first time Buffett asked Abel a question, he mistakenly said, “Charlie?” Appel ignored the error and delved into the challenges utilities face from the growing danger of wildfires and the reluctance of some regulators to let them earn reasonable profits.

Morningstar analyst Gregory Warren said he hopes Appel will talk more this year and allow shareholders to see some shine. Berkshire executives Talk about it.

“Greg is a rock star,” said Chris Blumstran, president of Semper Augustus Investment Group. “The seat is deep. He won’t have the same humor at the meeting. But I think we all come here to get a reminder every year to be sensible.”

Anything and everything

As always, Buffett addressed a variety of topics on Saturday, although he never talked about politics or revealed what he is buying. The stock he has been buying over the past year will remain secret until he is required to disclose it in the filings.

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He described his recent turbulent experience with artificial intelligence, saying he saw a fake image of himself delivering a message in his voice about something he said he would never say. He expects the technology to be a boon to scammers, but he’s not sure if it will do more good than harm. The fake video was so convincing that Buffett said he may have sent himself money overseas.

“It has tremendous potential for good and tremendous potential for harm, and I don’t know how it’s going to happen,” he said.

Regarding climate change, Jain said it causes greater losses for insurance companies and leads to higher prices. Jain said it’s difficult to know if rates are rising enough to handle the risk, but at least insurers have the opportunity to recalibrate their premiums every year.

“We get a lot of messages from people concerned about climate change — and I don’t think they’re wrong,” Buffett said. “But they don’t understand the insurance business.”

Overall, Buffett said Berkshire’s system of having all non-insurance companies report to Abel and insurance companies report to Jain is working well. The 93-year-old says he rarely gets any calls from managers anymore because they get more direction from Abel and Jane.

“This place will do very well the next day if something happens to me,” Buffett said. ___

For more AP coverage of Warren Buffett, see here: https://apnews.com/hub/warren-buffett. For Berkshire Hathaway news, see here: https://apnews.com/hub/berkshire-hathaway-inc. Follow Josh Funk online at https://www.twitter.com/funkwrite And https://www.linkedin.com/in/funkwrite.