Berkshire Hathaway's Q1 operating profit after taxes rose by 12.6% to $8.1 billion, primarily due to higher investment income and increased insurance profit. The company purchased $4.4 billion of stock, while its Q1 total earnings surged to $35.5 billion, mainly driven by a substantial rise in the value of its equity portfolio led by Apple. The 10-Q report shows that Berkshire cut its stake in Chevron by 20% to 132 million shares in Q1.
During the first quarter, Berkshire significantly reduced its stock holdings as it sold $13.3 billion worth of equities, including an estimated $6 billion of Chevron, and only purchased $2.9 billion, resulting in a net sale of more than $10 billion of stock. This is in stark contrast to the first quarter of 2022 when Berkshire purchased about $41 billion worth of stocks, including Chevron, Occidental Petroleum, Paramount Global, and HP. While Berkshire's stake in Apple appeared to remain unchanged, with around 915.7 million shares valued at approximately $159 billion based on Friday's closing price of $173.57.
Why it matters
Buffett, advises investors to focus on the company's operating profit, which excludes paper gains or losses on the investment portfolio. The latter is influenced by stock market levels and doesn't accurately reflect Berkshire's earnings power. The company predicted in its 2022 10-K report that Geico would make an underwriting profit in 2023, and this seems to be coming to fruition, which will likely please Berkshire's investors who have been eagerly awaiting a turnaround in that business.