Berkshire Hathaway Adds to Cash Stockpile, Operating Income Improves in Q1

Berkshire Hathaway (BRK.A), (BRK.B) announced its latest quarterly earnings, reporting another record cash holding and strong gains in its stock portfolio.

The company’s latest results were announced a few hours ahead of the first annual meeting since the death of Buffett’s long-time business partner Charlie Munger in November. Thousands of people have gathered in Omaha, Nebraska to hear Buffett talk about the first-quarter earnings and the economy at the company’s annual meeting.

Operating income improves, cash hoard swells

One of the key takeaways from Berkshire’s earnings was another record in its cash and U.S. Treasury holdings. The company now holds $36 billion in cash and $153 billion in Treasurys, for a total cash hoard of $189 billion.

Investors will be looking at Buffett to provide some clues about where this money could be deployed or which pockets of the markets he finds attractive.

Buffett said in the company’s annual letter this year that “only a handful of companies” in the U.S. met the Berkshire investment criteria, adding that “there are essentially no candidates,” elsewhere in the world.

Operating earnings at the conglomerate rose to $11.2 billion in the first quarter of 2024, up from $8.06 billion in the same period a year ago. Net income, an ineffective gauge according to Buffett because of unrealized investment gains or losses, was $12.7 billion, down compared to $35.5 billion for the same period a year ago.

Insurance premiums grow, railroads rise

The company had growing results in both its insurance and railroad businesses. Insurance investment income continued to improve, returning $21.5 billion in insurance premiums during the first quarter, up from $19.8 billion a year ago.

Surging auto insurance costs have been a big driver of profits, increasing at the fastest pace since 1976 at the tail end of 2023. A recent report also found home insurance premiums to be spiking, with homes covered for $250,000 seeing a 23% increase from 2023.

The railroad, utilities and energy businesses will be in focus due to volatile commodity prices. The company reported $24.4 billion in segment revenues for the quarter, up from $21.9 billion a year ago. 

Buffett was bullish on the future of railroads in his annual letter.

“A century from now, BNSF will continue to be a major asset of the country and of Berkshire. You can count on that,” he remarked.

Berkshire Hathaway Class B shares closed on Friday at $400.87, up more than 25% over the last year.