The investment conglomerate Berkshire Hathaway, led by the American investor Warren Buffett, announced a significant increase in operating profit by 39 percent to a record 11.22 billion dollars in the first quarter of this year, which corresponds to more than 261 billion crowns.
The company published its financial results before the start of the general meeting, which was held at the weekend. This year’s was the first since the death of Vice Chairman Charlie Munger, who was Buffett’s right-hand man and helped build his empire. Munger died last November 28 at the age of 100.
The company’s net profit for the first three months of the year fell by 64 percent to $12.7 billion. But the American billionaire sees net income as a misleading measure of performance because it includes gains and losses from stock ownership, regardless of what Berkshire buys or sells.
In other words, Buffett prefers to use operating profit when evaluating a company’s performance because he believes it is important to separate business performance (operating profit) from fluctuations caused by capital investments.
The company Berkshire Hathaway further announced that the amount of cash at its disposal reached 189 billion dollars, which is approximately 4.4 trillion crowns. Although this is the highest amount in the company’s history, compared to the company’s total assets or its market value, this ratio does not deviate much from the long-term average.
The long-term successful investor further stated that due to the current uncertainty in the world, it is more beneficial to hold a larger proportion of cash. “Under current conditions, I don’t mind increasing the amount of cash that the company holds. “When you compare the options that the stock markets offer and what’s going on in the world, I think it’s a pretty attractive decision,” Buffett said.
As early as last year, Buffett complained about the small number of suitable investment opportunities, as he said in a letter to shareholders published in late February.
Berkshire Hathaway is selling Apple
Buffett’s firm sold a significant portion of Apple shares in the first quarter. That fell 22 percent to $135.4 billion as of March 31 from $174.3 billion at the end of 2023, even as the iPhone maker’s share price fell just 11 percent. The conglomerate apparently sold about 115 million shares in the quarter, or about 13 percent of its stake.
Some investors have expressed concern in the past that Apple has become too large a part of Berkshire’s investment portfolio. Currently, Apple makes up “only” 40 percent of the portfolio of Buffett’s company.
“We’ve been selling shares, and I’d say it’s likely that at the end of the year, Apple will still be our largest investment that we hold,” Buffett said on the stock-restriction conference call. Buffett justified his confidence in Apple by considering CEO Tim Cook as an excellent leader of the company and a great successor to the late Steve Jobs.
More than 70 percent of Berkshire’s portfolio consists of just five companies. In addition to the aforementioned Apple, Bank of America accounts for more than ten percent of the portfolio, as well as American Express, Coca-Cola and Chevron.
Ninety-three-year-old Buffett is among the richest people in the world, and thanks to his successful investments, he earned the nickname The Oracle of Omaha. He has managed the company since 1965. According to the latest list of billionaires compiled by Forbes magazine, Buffett is the sixth richest person.
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