Berkshire Hathaway sold $13.3 billion worth of stocks and invested in its own stock and other companies due to challenges finding suitable investments, but still made a profit of $35.5 billion. The company’s diverse group of businesses, including Geico and Clayton Homes, are delivering value to shareholders, and its $130.6 billion cash pile remains the highest it’s been since 2021.
In a world where investing is all about finding the next big thing, Warren Buffett’s Berkshire Hathaway takes a different approach, focusing on the long-term value of its investments. In the first quarter of 2023, the company sold $13.3 billion worth of stocks, deciding it was better to repurchase some of its own stock for $4.4 billion and invest $2.9 billion in shares of other publicly traded companies. This move highlights the challenges of finding suitable investments in the current market, where valuations are unappetizing and cash piles up in search of opportunity. But don’t worry, folks, Berkshire Hathaway still made a profit of $35.5 billion due to the appreciation of its share price.
Buffett’s approach to investing isn’t the only thing that sets Berkshire Hathaway apart from the rest. Its diverse group of businesses, spanning energy, logistics, housing, and manufacturing, is a testament to the company’s long-term vision. For example, Geico, one of Berkshire’s crown jewels, has finally posted an underwriting profit after six consecutive quarters of losses. Thanks to reduced advertising and higher interest rates, this auto insurer raked in a cool $703 million.
However, some of Berkshire’s other businesses seem to be feeling the pinch of higher interest rates and slower economic growth. Clayton Homes, a major U.S. modular home maker, is struggling with declining home sales, while BNSF railroad faced lower rail traffic due to reduced imports from the West Coast and loss of customers. But it’s not all doom and gloom; rising interest rates have also benefited Berkshire, as income from their short-term Treasury bills and cash-like deposits increased to $1.1 billion, up from $164 million a year earlier.
While Buffett and his right-hand man, Charlie Munger, may not be thrilled with the current state of the U.S. stock market, they’re not exactly suffering either. Their $130.6 billion cash pile remains the highest it’s been since the end of 2021. Meanwhile, Berkshire Hathaway’s diverse group of companies continues to deliver value to shareholders. Berkshire’s stock has risen by 4.9% since the start of the year, proving that sometimes, slow and steady really does win the race.
At Berkshire’s annual meeting, tens of thousands of shareholders gathered in downtown Omaha to hear from Buffett, Munger, and other company executives. There, they discussed everything from the economy and the Fed’s efforts to reduce inflation to the company’s own performance. One question that arose was why Berkshire hadn’t made any significant investments in the U.S. banking sector, as it did during the financial crisis, when it helped support Goldman Sachs and Bank of America. The latter is now a central holding in Berkshire’s stock portfolio.
In summary, Berkshire Hathaway’s first quarter results serve as a reminder that even in a world where investors are constantly chasing the next shiny object, there’s still something to be said for discipline, patience, and a long-term investment strategy. With a diverse group of companies and a cash pile that would make Scrooge McDuck envious, Berkshire Hathaway remains committed to delivering value to its shareholders – not just for today, but for years to come.