Berkshire’s profit falls 64% due to portfolio holdings as Buffett sells Apple

OMAHA, Neb. – Berkshire Hathaway’s first-quarter profits slumped along with the paper value of its investments, but the company said Saturday that most of the companies it owns have performed absolutely well.

The company reported profit of $12.7 billion for the quarter, or $8.825 per Class A share. That’s about a third of last year’s $35.5 billion, or $24,377 per A share.

The numbers were heavily impacted by a sharp decline in the paper value of Berkshire’s investments. Buffett encourages investors to pay more attention to the conglomerate’s operating profits while ignoring investment figures. Operating profit rose 39% to $11.222 billion from $8.065 billion a year ago as insurance companies reported strong results.

On a per-share basis, operating numbers for the first quarter of this year come to $7,796.47 per Class A share, beating estimates from three analysts at FactSet Research of $6,701.87 per class -A share had forecast.

Buffett was a net seller of $17 billion worth of stocks in the quarter, including cutting about 13% of Berkshire’s huge Apple stake. At $135.4 billion, the iPhone maker still accounts for the largest share of Berkshire’s $364 billion portfolio. Buffett said he expects this to remain the case until his successor, Greg Abel, takes over.

The estimated value of Berkshire’s Apple stake suggests that Buffett sold more than 100 million shares. In the past, Buffett has said he invested in Apple stock because consumers value the company’s products so much, similar to consumer brands he loves, such as 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 announced them on Saturday.

Berkshire reported underwriting profits of $2.6 billion from its insurers, up from $911 million a year earlier, as Geico in particular continued to improve its results. However, BNSF Railroad’s profit fell 8% to $1.143 billion.

Most of Berkshire’s many other businesses delivered solid results, including a 72% increase in the utilities unit’s operating profit, boosting Berkshire’s overall profits by $717 million.

Revenue rose 5% to $89.87 billion in the quarter. The two analysts who provided FactSet estimates forecast $87.044 billion.

With no major acquisitions in sight, Berkshire’s cash pile climbed to a record $188.993 billion, even after the company spent $2.6 billion buying back shares in the first three months of the year. Holdings like Geico Insurance, BNSF Railroad, several major utility companies and a number of dozens of others continue to generate mountains of cash.

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

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