Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) released its first quarter results on Saturday, and there’s quite a bit to unpack. In addition to overall revenue and profit numbers, investors always monitor Berkshire’s cash reserves, buyback activity and the operating profit of its subsidiaries.
With that in mind, here’s a look at the key numbers, a major investment move that’s been revealed, and the important insights we’ve got don’t do it still know.
Headlines (which don’t mean much)
Warren Buffett himself has warned investors not to pay too much attention to the company’s net income (earnings per share, or EPS), because it includes unrealized gains and losses on investments in the huge Berkshire stock portfolio. This is especially true for the first trimester, because excellent The first quarter of 2023 brought an EPS decline of 64%, although Berkshire’s business performed quite well, as we’ll see in the next section.
Berkshire’s revenue rose 5%, and it’s worth noting that both the top and bottom line numbers were significantly better than analysts expected.
Operating profit paints a better picture
Berkshire’s operating profits tell us something about the performance of the company’s subsidiaries, and they look great. Overall, Berkshire’s operating profit increased 39% year over year.
A large part of this good performance is due to insurance activities. Underwriting revenue nearly tripled year over year and investment income increased 32%, primarily due to rising interest rates over the past year. Berkshire Hathaway Energy’s operating profit increased 72% year over year. The only significant decline was an 8% year-over-year decline in BNSF Railroad’s operating profit, but the rest of Berkshire’s business more than made up for that decline.
Is Buffett making fun of Apple?
One of the most important things investors should know about Berkshire Hathaway’s quarterly reports is: is not it revealed.
Specifically, while Berkshire reports the cost basis of its massive stock portfolio from quarter to quarter, we generally don’t know which stocks Berkshire bought or sold (with a few exceptions) until its 13-F is filed with the Securities and Exchange Commission. This quarter’s filing is due May 15, so we’ll have an updated look at Berkshire’s portfolio as it stood on March 31.
However, Berkshire publishes the market value of its largest stock positions at the end of the quarter. Judging by this data, it appears that Berkshire has offloaded approximately 13% of its enormous Apple (NASDAQ:AAPL) investment during the first quarter. This would certainly explain the rapid growth of the liquidity stock, as well as the accomplished investment gains of $11.2 billion mentioned by Berkshire in its earnings release.
Buybacks accelerated in the first quarter
Berkshire’s buyback activity is always of interest to shareholders because it provides insight into whether Buffett thinks the company’s stock is attractive. Even though a price below intrinsic value is a requirement for…
