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Berkshire Hathaway posts record profit and reduces Apple holdings in Q1 financial update!


Berkshire Hathaway posts record profit

Berkshire Hathaway Inc. revealed a significant increase in quarterly earnings this past Saturday, attributing this record-setting performance primarily to the strong outcomes in its insurance sector. Alongside this announcement, it became evident that the corporation has likely decreased its investment in Apple, as Berkshire's cash reserves surged dramatically to $189 billion.


The valuation of Berkshire’s holdings in Apple experienced a notable decline, decreasing by 22% to $135.4 billion by the end of the first quarter, compared to $174.3 billion at the end of the previous year. This reduction is significant as it came during a period when Apple's stock price itself only saw a modest fall of 11%.


The inference that Berkshire sold off a considerable amount of its Apple shares marks a distinct shift in strategy, especially given Warren Buffett's historically positive outlook on Apple's industry leadership and strong market position. This strategic pivot possibly addresses concerns from some investors regarding the disproportionately large share Apple represented within Berkshire’s overall investment portfolio.



In the recent financial quarter, Berkshire Hathaway's operating profit witnessed a remarkable growth of 39%, climbing to $11.22 billion, or roughly $7,807 per Class A share. This was a substantial increase from $8.07 billion reported in the same period the previous year. Despite this strong operating performance, Berkshire's net income saw a considerable downturn, falling 64% to $12.7 billion, or $8,838 per share, down from $35.5 billion.


This significant fluctuation in net income primarily results from an accounting rule that mandates the inclusion of unrealized gains or losses from its stock investments in its financial statements. Buffett has consistently recommended that investors look past these numbers due to their volatility, suggesting they do not reflect the company's actual operating performance.



Berkshire Hathaway also actively engaged in buying back its own shares, with repurchases totaling $2.6 billion during the quarter. The company continued this trend into the beginning of April, buying back a smaller amount of stock. These buybacks reflect Berkshire's ongoing strategy to return value to shareholders when it sees the company's stock as undervalued, aligning with Buffett's value investing principles.


These financial disclosures were timed to precede the annual Berkshire Hathaway shareholder meeting, which is held in Omaha and is an integral part of a weekend event that attracts tens of thousands of visitors each year. The meeting is not just a focal point for financial discussion but also a significant event for the local economy, bringing in a large number of visitors who contribute to various sectors, from hospitality to retail. This annual gathering underscores the influence and draw of Berkshire Hathaway and its celebrated CEO, Warren Buffett, within the global investment community.


04.05.2024



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