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Berkshire Hathaway’s cash pile hits new record as Buffett dumps stocks Billionaire investor slashes stake in Apple, which he has described as one of Berkshire’s ‘four giants’

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 (Reuters) - Berkshire Hathaway (BRKa.N), opens new tab

significantly reduced its enormous stake in Apple (AAPL., opens new tab in the first quarter, as Warren Buffett's conglomerate let its cash hoard swell to a record $189 billion.
Buffett's company also posted a record operating profit exceeding $11 billion, as its insurance operations benefited from improved underwriting and higher income from investments as interest rates rose.
The value of Berkshire's stake in Apple fell 22% to $135.4 billion as of March 31 from $174.3 billion at the end of 2023, even though the iPhone maker's share price fell just 11% in the quarter.
Based on changes in Apple's stock price, Berkshire appears to have sold about 115 million shares, or 13% of its holdings, in the quarter, ending with about 790 million.
A large sale is an about-face for Buffett, who is normally tech-phobic but came to view Apple as a consumer goods company with strong pricing power and devoted customers.
Some investors, however, have expressed concern that Apple consumed too much of Berkshire's investment portfolio.
But the sales leave Buffett with more than six times the minimum $30 billion cash cushion he has pledged to keep.
At Berkshire's annual meeting on Saturday, Buffett assured shareholders that "unless something dramatic happens that really changes capital allocation, we will have Apple as our largest investment."
He also said "I don't mind" expanding the cash stake, in light of alternatives in the equity markets and conflicts around the world, and said cash could top $200 billion by the end of June.
The Apple sales resulted in Berkshire's realizing $11.2 billion of after-tax gains in the quarter from selling investments. Buffett maintained that he doesn't mind paying taxes.

PROFIT SWELLS

First-quarter operating profit rose 39% to $11.22 billion, or about $7,807 per Class A share, from $8.07 billion a year earlier.
"Berkshire continues to benefit from attractive yields on short-term investments and large cash balances," Edward Jones analyst James Shanahan said in a research note.
Net income fell 64% to $12.7 billion, or $8,838 per share, from $35.5 billion a year earlier, when Berkshire had large unrealized gains from its stocks.
An accounting rule requires Berkshire to report those gains with its financial results. Buffett urges investors to ignore the resulting volatility.
Berkshire also repurchased $2.6 billion of its own stock in the first quarter and a small amount in the first three weeks of April.
The 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, 93, has led Berkshire since 1965, transforming it from a struggling textile company into a conglomerate whose dozens of businesses include Geico, the BNSF railroad, Berkshire Hathaway Energy, Dairy Queen, and See's Candies.
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.

GEICO HELPS POWER EARNINGS

Insurance profit soared 80% to $5.2 billion. This included a more than doubling of underwriting profit at Geico, which benefited from rate increases and a large decline in the percentage of premiums it used to pay for accident losses.
Profit fell 8% at the BNSF railroad, in part because of lower fuel surcharges and an "unfavorable business mix."
Berkshire Hathaway Energy saw profit rise 72%, as improved operating performance from utilities helped offset rising legal costs at the HomeServices of America real estate brokerage related to legal settlements over brokerage commissions.
The energy business still faces billions of dollars in claims against its PacifiCorp unit over Oregon wildfires in 2020.
Warren Buffett took the stage at Berkshire Hathaway's (BRKa.N), opens new tab annual meeting on Saturday, paying tribute to his longtime business partner Charlie Munger who died last year and outlining Berkshire's goal to grow earnings.
The meeting is the 60th for Buffett, 93, since he took over Berkshire in 1965. He has largely stopped appearing publicly to discuss the company. He told investors in November that he felt good but knew he was "playing in extra innings, opens new tab."
The shareholder meeting is the first since Charlie Munger, Buffett's longtime friend, business partner, and foil, died in November at age 99. In a video ahead of the meeting, Berkshire played a tribute to Charlie Munger showing photos of Omaha from 1924 and footage of Buffett and Munger through the years.
Munger was known for laconic and acerbic comebacks to Buffett's often lengthy appraisals about Berkshire, the economy, Wall Street and life.
“Charlie’s architectural thoughts led to the Berkshire Hathaway of today,” said Buffett on the video. His design, he said, “lives beyond his lifetime and will live far beyond mine.”
Ahead of the meeting, Berkshire reported first-quarter earnings that showed that its cash pile swelled to $189 billion as of March 31 while the size of its stake in Apple (AAPL.O), opens new tab fell. Based on changes in Apple's stock price, Berkshire appeared to have sold 13% of its Apple shares in the quarter.
Buffett has long touted the iPhone maker's leadership and market dominance. Some investors have expressed concern that Apple had become too large a part of Berkshire's investment portfolio. Apple CEO Tim Cook was in the audience at the meeting on Saturday.
"The goal of Berkshire… is to increase the operating earnings," Buffett said as he kicked off the meeting with a run-down of the first quarter's earnings.
In downtown Omaha, hundreds of shareholders waited in line overnight to get in early. When the doors opened, some shareholders ran in to get good seats and the auditorium quickly filled up.
"I was here since 2:30 a.m.," said Serena Lam, 32, an investment portfolio manager who flew in with 40 others from Hong Kong and was standing first in line at one of the entrances. "I want to see Warren Buffett. I want to get his perspective about Japanese stocks. I flew over 25 hours for this."
At a downtown arena, Buffett and Vice Chairman Greg Abel, 61, will answer about five hours of questions. Vice Chairman Ajit Jain, 72, will also join. Abel was designated Buffett's successor as chief executive in 2021.
Bill Gunther, 72, a retired state forester from Newfane, Vermont, brought a lawn chair to sit in while on line.
"I feel very bullish about Berkshire. They're so diversified and have a good company culture. That's the one thing that I loved."
Investors are focused on how the conglomerate will evolve as it faces challenges including how best to grow without overpaying for acquisitions, whether to pay a dividend and how to deploy cash on hand that stood at $189 billion as of the end of March.

SUCCESSION TOP OF MIND

Berkshire is a $862 billion conglomerate with dozens of businesses including BNSF railroad, Geico car insurance, Dairy Queen and Fruit of the Loom. It also owns well over $300 billion of stocks, close to half of which is Apple (AAPL.O), opens new tab.
Berkshire's stock is up 23% over the last year, lagging the Standard & Poor's 500's (.SPX), opens new tab 25% gain. Over the last decade, it has risen 218% versus the S&P's 172% gain.
Buffett is expected to face a wide array of questions on Saturday from major investments such as Apple and Occidental Petroleum (OXY.N), opens new tab to how elevated interest rates have affected the company.
"I want to see Warren's energy," said Steven Check, president of Check Capital Management, attending his 27th meeting. "It's good that Greg and Ajit will be out front."
Berkshire will also release first-quarter results and shareholders will vote on six proposals about climate, diversity, and China. Buffett opposes all six.
The weekend features opportunities for shareholders to buy goodies such as Berkshire T-shirts and Squishmallows toys at exhibits featuring Berkshire-owned companies.
Ruth Gearhart, 72, from Omaha, filled her bags with See’s Candies plus tongs and spatulas from Pampered Chef. A 15-year shareholder, Gearhart said she was mainly concerned with what Buffett might say regarding his succession.
"I trust him," she said. "He's a brilliant man and has many brilliant people. He will get us through this. I'd hate to see him go, but I think they prepared for it well."

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