Buffett's Berkshire posts $35.5 billion profit, buys back more stock

© Reuters. Berkshire Hathaway Chairman Warren Buffett walks through the exhibit hall as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc's annual shareholder meeting in Omaha, Nebraska, U.S., May 4, 2019. REUTERS/Scott Morgan

By Jonathan Stempel

OMAHA, Nebraska (Reuters) - Warren Buffett's Berkshire Hathaway (NYSE:BRKa) Inc posted a $35.5 billion first-quarter profit on Saturday, reflecting gains from stocks such as Apple Inc (NASDAQ:AAPL), while higher investment income and a rebound at car insurer Geico bolstered operating results.

Berkshire also sped up repurchases of its own stock, buying back $4.4 billion, while paring its investments in other stocks such as Chevron Corp (NYSE:CVX), which is still a major holding.

Results were released ahead of Berkshire's annual shareholder meeting in Omaha, part of a weekend that draws tens of thousands of people to the city.

Buffett, 92, has run Berkshire since 1965, transforming it from a struggling textile company into a conglomerate with dozens of businesses including Geico, the BNSF railroad, Berkshire Hathaway Energy, and manufacturing and retail units including See's Candies and Dairy Queen ice cream.

The diversification has led many investors, not just Buffett fans, to view Berkshire as a stable long-term investment even amid recession fears and concerns about the banking industry.

MORE CASH

Net income equaled $24,377 per Class A share and rose from $5.58 billion, or $3,784 per share, a year earlier.

That in part reflected a 27% jump in Apple's stock price, leaving Berkshire with a $151 billion stake in the iPhone maker.

An accounting rule requires Berkshire to report unrealized gains and losses with net results, and Buffett urges investors to ignore the resulting volatility.

Quarterly operating profit increased 13% to $8.07 billion, or about $5,561 per Class A share, from $7.16 billion.

Those results benefited from Geico snapping a six-quarter string of underwriting losses, and a 68% increase in how much Berkshire's insurance units generate from investments.

Geico's pretax underwriting gain was $703 million, benefiting from higher premiums, fewer crashes and a significant drop in ad spending, which may have led to fewer high-risk drivers seeking coverage.

Berkshire's cash hoard grew $2 billion in the quarter to $130.6 billion, as the company sold $13.3 billion of stocks and bought just $2.9 billion.

Chevron appears to have been among the sales, with Berkshire's stake falling 28% to $21.6 billion though the oil company's stock price dropped just 9%.

Berkshire also owns a 23.6% stake in another oil company, Occidental Petroleum Corp (NYSE:OXY).

Its stock sales more than offset the $8.2 billion Berkshire spent to boost its stake in truck stop operator Pilot Travel Centers to 80% from 38.6%, leaving the founding Haslam family with 20%. The increase was expected.

IMPACT OF WILDFIRES

Profit at the BNSF railroad fell 9% to $1.25 billion, hurt by higher fuel costs and lower shipping volumes.

Berkshire Hathaway Energy, normally a steady earnings generator, saw profit fall 46% as it set aside $359 million for legal and other costs from wildfires in Oregon and northern California, where it has multiple operations, in 2020.

Operating results also reflected October's purchase of insurance holding company Alleghany (NYSE:Y) Corp, while net results included a gain related to Pilot.

Berkshire's Class A shares have risen 4.9% this year, trailing the Standard & Poor's 500's 7.7% gain. The index lagged Berkshire by 23.4 percentage points in 2022, excluding dividends.