Berkshire Hathaway’s cash pile reached a new high, while operating earnings surged, in the company’s first quarter without Warren Buffett as CEO.
Berkshire’s (BRK.A, BRK.B) cash and equivalent holdings climbed to a record $397.38 billion as it trimmed its stock holdings in the first quarter under new CEO Greg Abel, the company said Saturday.12 Berkshire said it sold $24.09 billion in equity securities in the quarter, while it bought $15.94 billion. Apple (AAPL), American Express (AXP), Bank of America (BAC), Coca-Cola (KO) and Chevron (CVX) remained its largest holdings.
Operating earnings jumped nearly 18% to $11.35 billion, largely attributable to a rebound in the company’s insurance business. In the previous quarter, Berkshire had posted a nearly 30% year-over-year drop in operating earnings as the company took write-downs of its stakes in Kraft Heinz (KHC) and Occidental Petroleum (OXY).
The company also restarted its buyback program for the first time in nearly two years, repurchasing $234.2 million of its own shares over the period, following a long-term playbook whenever the shares fall below their perceived intrinsic value. Abel has been buying up Berkshire’s shares himself, a show of confidence in future gains.
The new CEO was in the spotlight at Saturday’s shareholder meeting, where he sought to assure shareholders of his commitment to the the firm’s longstanding values, and its potential for future growth, after Buffett stepped down at the end of last year. Abel told investors he sees a “unique opportunity” for Berkshire to excel across its many businesses that are “fundamental and really central to American businesses and American industry and to the American consumer.”
The 95-year-old Buffett, who was in the audience at Saturday’s event, took the microphone to tell investors the company “couldn’t have made a better decision” than Abel for the top role, saying that “he’s the right person.”
Apple CEO Tim Cook, who was also in attendance, got a shoutout from Buffett, who commented pointedly on Cook’s record after the iPhone maker recently announced its head of hardware engineering, John Ternus, will take over the top job from Cook at the start of September.
“When Tim Cook went into the top position at Apple, he succeeded a legend,” said Buffett, and “not many people knew Tim’s name.” However, Berkshire’s shareholders have been heavily rewarded for standing by Apple through Cook’s tenure, Buffett said.
However, investors who had hoped Saturday’s event could bring more specific insights into Abel’s investment ideas and plans for the firm, such as how Berkshire’s cash pile could be allocated, may have to wait a bit longer. Abel said Saturday he is “absolutely collaborating” with Buffett on the firm’s portfolio.
