Berkshire bought $51 billion stock as Buffett combats supply chain; operating results flat

By Jonathan Stempel

OMAHA, Neb. (Reuters) – Warren Buffett’s Berkshire Hathaway Inc dove into fairness markets within the first quarter, spending greater than $51 billion on shares together with a a lot bigger stake in Chevron Corp.

Berkshire, which Buffett has run since 1965, additionally stated on Saturday quarterly working revenue was little modified from a yr earlier, with some companies capable of fend off provide chain disruptions. Geico, the automotive insurer, posted an underwriting loss.

The Omaha, Nebraska-based firm additionally stated it repurchased $3.2 billion of its personal inventory within the quarter, however none within the first three weeks of April.

Berkshire’s disclosures recommend that Buffett has lastly discovered massive new makes use of to eliminate Berkshire’s money pile, which shrank greater than $40 billion to about $106 billion.

The Chevron stake grew to $25.9 billion as of March 31 from simply $4.5 billion three months earlier, as oil costs surged increased following Russia’s invasion of Ukraine.

That got here on the heels of Berkshire’s buy of properly over $6 billion of inventory in Occidental Petroleum Corp, the place it already had a $10 billion most well-liked inventory stake.

Buffett has additionally dedicated $11.6 billion to purchase insurance coverage firm Alleghany Corp, and purchased $4.2 billion of HP Inc inventory.

Berkshire ended March with $391 billion of shares, greater than half of the corporate’s $712 billion total market worth.

Different companies embody the BNSF railroad, Berkshire Hathaway Power, and quite a lot of manufacturing and retail operations together with See’s Candies and Dairy Queen ice cream.

NET RESULTS FALL

First-quarter working revenue edged as much as $7.04 billion, or about $4,786 per Class A share, from $7.02 billion a yr earlier.

Berkshire’s web revenue fell 53% to $5.46 billion, or $3,702 per Class A share, to $11.71 billion, or $7,638 per Class A share, a yr earlier.

Internet outcomes included $1.58 billion of good points and losses from shares together with Apple Inc, in addition to Chevron.

An accounting rule requires Berkshire to report unrealized good points and losses with web outcomes, and Buffett urges buyers to disregard the ensuing volatility.

Berkshire launched outcomes forward of its first in-person annual shareholder assembly since 2019 in Omaha.

DISRUPTIONS

In its quarterly report, Berkshire alluded to the Ukraine invasion, with out mentioning it particularly, and the unfold of Omicron variants of COVID-19 in discussing the availability chain points that many companies now face.

“Vital disruptions of provide chains and better prices have continued in 2022,” it stated. “Additional, the event of geopolitical conflicts in 2022 have contributed to disruptions of provide chains, leading to value will increase for commodities, items, and companies in lots of components of the world.”

Berkshire companies that took hits included Precision Castparts plane components, Clayton Houses cell properties and McLane meals distribution.

Chip shortages had been additionally an issue, dampening client delivery quantity at BNSF and decreasing gross sales quantity at Berkshire Hathaway Automotive automotive dealerships.

Income however rose at each, with BNSF benefiting from increased gas costs and surcharges, and automotive and truck gross sales income rising as a result of automobiles are getting dearer.

Rising used automotive costs and shortages of substitute components additionally weighed on the Geico auto insurer, which posted an underwriting loss as a result of loss claims are rising.

Revenue from Berkshire Hathaway Power, one in all Berkshire’s largest companies and a gradual earnings generator, rose 7%, helped by increased electrical utility margins and tax advantages at its MidAmerican Power unit.

Berkshire’s inventory has withstood current market volatility much better than many different massive U.S. shares. Its Class A shares are up greater than 7% this yr, whereas the Customary & Poor’s 500 has fallen 13%.

(Reporting by Jonathan Stempel in Omaha, Nebraska; Modifying by Catherine Evans, Ros Russell and Diane Craft)