Warren Buffett’s Berkshire Hathaway sold billions of dollars worth of shares and invested little money in the US stock market in the first three months of the year, as the famous investor saw little appeal in a volatile market.
Berkshire disclosed on Saturday that it had sold $13.3 billion worth of stock in the first quarter and bought stock for a fraction of that figure. Instead, it spent $4.4 billion buying back its own shares, as well as $2.9 billion on the shares of other publicly traded companies.
The numbers underscore the struggle Berkshire faces in putting its mountain of cash to work at a time when Buffett and his longtime right-hand man Charlie Munger consider valuations unappetizing. The company̵[ads1]7;s cash pile has risen by $2 billion since the start of this year to $130.6 billion, the highest level since the end of 2021.
Munger told the Financial Times last month that investors should lower expectations for stock market returns as the Federal Reserve raises interest rates and the economy slows.
Berkshire reported a first-quarter profit of $35.5 billion, or $24,377 per Class A share, driven largely by a rally in stocks that boosted the value of its $328 billion portfolio. The result was up from 5.6 billion dollars the previous year.
Operating income — Buffett’s preferred performance measure for Berkshire’s diverse group of businesses — rose 12.6 percent from a year earlier to $8.1 billion. For the first time, the figure includes the results of truck stop business Pilot Flying J, which Berkshire took majority control of in January.
The results are often scrutinized given the cross-section of land Berkshire’s dozens of businesses touch, including in energy, logistics, housing and manufacturing.
One of Berkshire’s crown jewels, auto insurer Geico, posted an insurance profit after six consecutive quarters of losses. The company said scaling back advertising and raising policy rates had helped the unit generate an underwriting profit of $703 million.
The impact of higher interest rates and slower economic growth was evident across businesses, which span ice cream supplier Dairy Queen, aircraft parts maker Precision Castparts and BNSF railroad.
Berkshire warned that lower home sales continued to weigh on Clayton Homes, one of the largest manufacturers of modular homes in the US, and that sales across other housing businesses had fallen at the start of the year. Traffic on the BNSF railroad also fell at the beginning of the year, which the company blamed on lower imports from the West Coast and the loss of a customer.
However, higher interest rates have also been a boon for Berkshire. The company invests the vast majority of its $130.6 billion in cash in short-term treasury bills and bank deposits.
Income on these short-term bills and cash-like deposits rose to $1.1 billion, up from $164 million a year earlier.
The figures were released just hours before Buffett and three other Berkshire executives take the stage in downtown Omaha, where tens of thousands of shareholders have gathered for the company’s annual meeting.
Shareholders will hear the 92-year-old billionaire and his deputies Munger, Gregory Abel and Ajit Jain discuss the economy, the Fed’s efforts to bring down inflation and Berkshire itself.
The four men will probably be pressed as to why the sprawling conglomerate had not made a significant investment in the US banking sector, as it did in the middle of the financial crisis.
At the time, Berkshire’s capital helped prop up both Goldman Sachs and Bank of America. The latter is now a core item in the company’s share portfolio.
The Berkshire share has risen by 4.9 percent since the start of the year.