Warren Buffett’s Berkshire Hathaway Reports Earnings Saturday—What You Need To Know

Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) is set to report its second-quarter financial results on Saturday. Here’s a guide to some of the key metrics investors will be watching for in the earnings report.

Looking At Operating Income, Not EPS

While investors typically focus on net income and earnings per share for most companies, Warren Buffett’s firm is a little different. Given the magnitude of its investments, accounting rules for those can skew profit figures.

“The amount of investment gains (losses) in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules,” past earnings reports have warned.

The number to watch out for is operating income, that according to Buffett, provides a better picture of the health of the company’s businesses. At the end of the first quarter, that number stood at $11.2 billion, up from $8.1 billion a year earlier.

Berkshire’s Cash Pile in Focus

Berkshire had a massive stockpile of about $189 billion in cash and other short-term investments as of the end of March, with most of it parked in short-term U.S. Treasurys. Investors will undoubtedly be looking to see how Berkshire has spent from that reserve, or if it has continued to hold or add to it.

Berkshire has also historically used its cash to engage in share buyback programs. Buffett has reduced the number of outstanding shares by at least 10% by spending billions to buy back stock.

The company has also expanded its portfolio by acquiring business, buying the remaining 20% stake in Pilot Travel Centers earlier this year after building up its position over a months-long period.

However, Berkshire may calibrate the rate at which it invests in new businesses, having previously cited a lack of good candidates. In the 2023 annual letter released in February, Buffett said that there were “only a handful of companies” in the U.S. that could fit the company’s investment criteria and that there were “essentially no candidates,” among other geographies.

Clues To Portfolio Changes?

After keeping it a secret since late last year, Berkshire revealed an investment in Chubb (CB) in May, sending the insurer’s shares soaring. Chubb shares have gained nearly 8% since the announcement.

But that wasn’t the only surprise coming out of Berkshire’s portfolio. Buffett, who is famous for buying and holding companies for extended periods of time, pared his stake in Apple (AAPL)—selling roughly 116 million shares from its largest equity position by the end of the first quarter.

Recently, shares of Bank of America (BAC) have been on the chopping block. Buffett began to unload its shares in the bank beginning July 17, the first time Berkshire has reduced its position in the bank since 2019.

Still, Berkshire retains a large stake in Bank of America. After reducing its stake by 71.2 million shares worth roughly $3 billion in the last month, Berkshire owns more than 961 million shares. That leaves Bank of America Berkshire’s second-largest holding after Apple.

While July is outside the Q2 earnings report period, investors will likely look for clues regarding any noteworthy trading activity in this earnings report.

Insurance Business Flourishing

Investors will also likely be watching for updates on Berkshire’s thriving insurance segment, its largest driver of revenue and earnings before taxes. Its businesses include GEICO, Central States Indemnity, MLMIC Insurance, United States Liability Insurance Group, and several other insurance companies.

“We expect more muted growth at GEICO to be offset by an acceleration in growth at Berkshire’s reinsurance units,” said CFRA Research analyst Catherine Seifert in recent note.

Seifert suggested the tide could turn for GEICO and reinsurer margins as claims costs and catastrophe claims ease, anticipating the company’s insurance and reinsurance businesses, along with acquisitions, could boost results this year.

Berkshire Hathaway’s Class B shares have gained over 21% since the start of the year, at $431.81 as of Thursday’s close.