Berkshire Hathaway Inc’s cash pile soared to its highest level and operating earnings jumped in Greg Abel’s first quarter as chief executive officer.
After a slight decrease late last year, the firm’s cash hoard jumped to US$397 billion in the first quarter as it offloaded a net US$8.1 billion of equity holdings in the period, the Omaha, Nebraska-based conglomerate said in a statement on Saturday.
Meanwhile, operating earnings got a boost from an improvement in underwriting results in its vast insurance businesses, up about 18 percent from a year earlier to US$11.35 billion, it said.
Photo: Reuters
Abel, who replaced legendary investor Warren Buffett as chief executive officer this year, also resumed stock buybacks, handing shareholders a payout for the first time in more than a year. Berkshire bought back US$234.2 million of its own shares in the period.
The results show how Abel is starting to put his mark on Berkshire, where there are some signs investors still are not sold on the new CEO. Once synonymous with consistent outperformance, the US$1 trillion conglomerate’s shares have been trounced by the broader market since Buffett announced he was retiring and handing Abel the reins a year ago.
Abel took to the stage and addressed shareholders in Omaha on Saturday for his inaugural annual meeting as CEO. This is the first time in decades that Buffett would not be leading the event after the 95-year-old announced he would step down from his role last year — although he was still in attendance and even shared a few remarks to help launch the meeting.
Berkshire’s earnings are typically closely watched, because the conglomerate’s businesses — ranging from insurance to railroads to energy and manufacturing — provide a snapshot of the health of the US economy.
Abel has previously said that he and Buffett had determined that the intrinsic value of the firm’s shares was higher than their market value, prompting them to restart buybacks. Berkshire’s stock declined 5.9 percent this year as of market closing on Friday.
Underwriting earnings from the firm’s collection of insurance businesses surged to US$1.7 billion, up about 29 percent from a year ago, when the units were hit by losses tied to the Los Angeles wildfires. Still, insurer Geico Corp posted a 35 percent decline in pretax underwriting earnings, as the unit faced more losses and spent more to gain new clients.
BNSF Railway Co’s net profit rose 13 percent to US$1.4 billion, relieving pressure on its management, led by CEO Katie Farmer, to improve the unit’s operating margin and close the gap with its most efficient peers. Abel said at the meeting that while he is pleased with the first-quarter results, there is still room for improvement.
Meanwhile, Berkshire decided against a new impairment charge on Kraft Heinz Co — one of its largest equity holdings — for now, even as the book value of its holding in the packaged food giant exceeds its fair value by US$1.4 billion. Last year, the firm took a US$3.8 billion hit, as the stock’s performance continued to disappoint.
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