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Profit drops at Warren Buffett’s firm but thousands still want to hear from the investing guru

Warren Buffett’s company reported a steep drop in earnings Saturday because the paper value of its investments fell, but the tens of thousands of shareholders filling an Omaha arena to hear Buffett answer questions at the annual meeting later can take heart that Berkshire’s Hathaway’s many businesses performed well. Berkshire reported a $12.7 billion profit, or $8.825 per Class A share, in the quarter. That’s roughly one-third of the $35.5 billion, or $24,377 per A share, that Berkshire reported a year ago.

Quick Read

  • Berkshire Hathaway Earnings Report: Warren Buffett’s Berkshire Hathaway reported a significant drop in quarterly earnings from $35.5 billion last year to $12.7 billion this year, largely due to a decrease in the paper value of its investments.
  • Operating Earnings Increase: Despite the overall drop, Berkshire’s operating earnings saw a 39% increase to $11.222 billion, led by strong performances in its insurance businesses.
  • Analysts’ Expectations Exceeded: The reported operating earnings surpassed the average analyst prediction of $6,701.87 per Class A share.
  • Insurance and Utility Gains: Berkshire’s insurance operations reported a $2.6 billion underwriting profit, and its utility profits increased by 72%.
  • Cash Reserves and Share Repurchases: Berkshire’s cash pile grew to a record $188.993 billion, with the company spending $2.6 billion on share repurchases.
  • Charlie Munger’s Absence Felt: This year marks the first annual meeting since the passing of Vice Chairman Charlie Munger, noted for his sharp, succinct commentary.
  • Potential for New Voices: The meeting might provide a platform for shareholders to hear more from Berkshire executives like Ajit Jain and CEO-successor Greg Abel, highlighting the strength of Berkshire’s management team beyond Buffett and Munger.

The Associated Press has the story:

Profit drops at Warren Buffett’s firm but thousands still want to hear from the investing guru

Newslooks- OMAHA, Neb. (AP) —

Warren Buffett’s company reported a steep drop in earnings Saturday because the paper value of its investments fell, but the tens of thousands of shareholders filling an Omaha arena to hear Buffett answer questions at the annual meeting later can take heart that Berkshire’s Hathaway’s many businesses performed well.

Harold and Caroline Ernst of St. Louis chat with fellow shareholders as they wait for the Berkshire Hathaway annual meeting to begin on Saturday, May 4, 2024, in Omaha, Neb. (AP Photo/Rebecca S. Gratz)

Berkshire reported a $12.7 billion profit, or $8.825 per Class A share, in the quarter. That’s roughly one-third of the $35.5 billion, or $24,377 per A share, that Berkshire reported a year ago.

Berkshire Hathaway investment manager Ted Weschler, center, talks with Brooks Running CEO Dan Sheridan, Friday, May 3, 2024, in Omaha, Neb., one day ahead of the annual shareholders meeting. (AP Photo/Josh Funk)

But those figures were heavily swayed by a large drop in the paper value of Berkshire’s investments. That’s why Buffett encourages investors to pay more attention to the conglomerate’s operating earnings that exclude the investment figures. By that measure, Berkshire’s operating earnings jumped 39% to $11.222 billion from last year’s $8.065 billion as its insurance companies led a strong performance.

Thousands of Berkshire Hathaway shareholders line up outside the Omaha arena where the annual meeting will be held, in Omaha, Neb, Saturday, May 4, 2024. Tens of thousands of people are expected to flock to Omaha, Nebraska, to soak up wisdom from investing wizard Warren Buffett. Saturday’s annual shareholder’s meeting for Buffett’s Berkshire Hathaway conglomerate is famous for featuring the so-called Oracle of Omaha (AP Photo/Josh Funk)

The three analysts surveyed by FactSet Research had predicted operating earnings of $6,701.87 per Class A share.

Berkshire Hathaway Vice Chairman Greg Abel checks out the flight simulators offered by one of Berkshires companies, Flight Safety as he toured the exhibit hall Friday, May 3, 2024, in Omaha, Neb. ahead of Saturday’s meeting. Abel is set to succeed Warren Buffett as CEO one day. (AP Photo/Josh Funk)

Berkshire reported a $2.6 billion underwriting profit at its insurers, up from $911 million a year ago.

Berkshire Hathaway Vice Chairman Greg Abel checks out the flight simulators offered by one of Berkshires companies, Flight Safety as he toured the exhibit hall Friday, May 3, 2024, in Omaha, Neb. ahead of Saturday’s meeting. Abel is set to succeed Warren Buffett as CEO one day. (AP Photo/Josh Funk)

BNSF railroad’s profits did disappoint and drop 8% to $1.143 billion, but most of its many other companies delivered solid results, including a 72% jump in operating profits at the utility unit that added $717 million to Berkshire’s total.

Berkshire Hathaway shareholders pose with a cutout poster of CEO Warren Buffett, Friday, May 3, 2024, in Omaha, Neb., one day ahead of the annual shareholders meeting. (AP Photo/Josh Funk)

Berkshire’s revenue grew 5% to $89.87 billion in the quarter. The two analysts who reported estimates to FactSet predicted $87.044 billion revenue.

Daegwon Kim of South Korea, who arrived in line at 3:30 a.m., takes photos of the crowd behind him outside the Berkshire Hathaway annual meeting on Saturday, May 4, 2024, in Omaha, Neb. (AP Photo/Rebecca S. Gratz)

With no major acquisitions in sight, Berkshire’s massive cash pile continued to grow to a record $188.993 billion in the quarter. Berkshire even spent $2.6 billion repurchasing shares during the first three months of the year, but its companies that include Geico insurance, BNSF railroad, several major utilities and an assortment of dozens of others keep generating mountains of cash.

Berkshire Hathaway Vice Chairman Greg Abel poses for pictures with shareholders while touring the booths Berkshires companies set up, Friday, May 3, 2024, in Omaha, Neb. Abel will succeed Warren Buffett as CEO one day. (AP Photo/Josh Funk)

The main arena was already three-quarters full within half an hour of the doors opening Saturday because people are always eager to gather tidbits of wisdom from billionaire Warren Buffett. But a key ingredient is missing this year: It’s the first meeting since Vice Chairman Charlie Munger died.

Berkshire Hathaway shareholders pose with a cutout poster of CEO Warren Buffett Friday, May 3, 2024, in Omaha, Neb., inside the exhibit hall in Omaha where Berkshire companies sell their products. Buffett will spend hours answering questions at the meeting Saturday. (AP Photo/Josh Funk)

“He was the sriracha sauce in the Berkshire Hathaway meeting,” said investor Bill Smead, a regular at the event for 14 years. “He gave it a lot of flavor.”

A person takes a photo of the Warren Buffett and Charlie Munger Squishmallows before Saturday’s Berkshire Hathaway shareholders meeting in Omaha, Neb., on Friday, May 3, 2024. are again one of the hottest item for sale this year at the Berkshire Hathaway shareholders meeting. (AP Photo/Josh Funk)

For decades, Munger shared the stage with Buffett every year for the marathon question and answer session that is the event’s centerpiece. Munger routinely let Buffett take the lead with expansive responses that went on for several minutes. Then Munger himself would cut directly to the point. He is remembered for calling cryptocurrencies stupid, telling people to “marry the best person that will have you” and comparing many unproven internet businesses in 2000 to “turds.”

Berkshire Hathaway shareholders pose with the mascot for one of its companies, Oriental Trading, while the more famous spokeslizard for Geico insurance looms over their shoulder, Friday, May 3, 2024, in Omaha, Neb. CEO Warren Buffett will spend hours answering questions at the meeting on Saturday. (AP Photo/Josh Funk)

He and Buffett functioned as a classic comedy duo, with Buffett offering lengthy setups to Munger’s witty one-liners. Together, they transformed Berkshire from a floundering textile mill into a massive conglomerate made up of a variety of interests, from insurance companies such as Geico to BNSF railroad to several major utilities and an assortment of other companies.

Berkshire Hathaway shareholders watch a model BNSF train run past a model town filled with other Berkshire companies Friday, May 3, 2024, in Omaha, Neb. Buffett will spend hours answering questions at a meeting Saturday. (AP Photo/Josh Funk)

Munger often summed up the key Berkshire’s success as “trying to be consistently not stupid, instead of trying to be very intelligent.” He and Buffett also were known for sticking to businesses they understood well.

Valerie Deichert of Omaha, left, assists shareholders with their purchases from the Oriental Trading booth during the Berkshire Hathaway annual meeting on Saturday, May 4, 2024, in Omaha, Neb. (AP Photo/Rebecca S. Gratz)

“Warren always did at least 80% of the talking. But Charlie was a great foil,” said Stansberry Research analyst Whitney Tilson, who was looking forward to his 27th consecutive meeting with a bit of a heavy heart because of Munger’s absence.

Berkshire Hathaway shareholders line up to take selfies with Greg Abel Friday, May 3, 2024, in Omaha, Neb. Abel will one day replace Warren Buffett as CEO. (AP Photo/Josh Funk)

That absence, however, may well create space for shareholders to get to know better the two executives who directly oversee Berkshire’s companies: Ajit Jain, who manages the insurance units, and Greg Abel, who handles everything else. Abel will one day replace the 93-year-old Buffett as CEO.

Bart Macdonald of New York City takes photos of the BNSF Railway model train display during the Berkshire Hathaway annual meeting on Saturday, May 4, 2024, in Omaha, Neb. (AP Photo/Rebecca S. Gratz)

Morningstar analyst Greggory Warren said he hopes Abel will speak up more this year and let shareholders see some of the brilliance Berkshire executives talk about. Ever since Munger let it slip at the annual meeting three years ago that Abel would be the successor, Buffett has repeatedly reassured investors that he’s confident in the pick.

Berkshire Hathaway Vice Chairman Greg Abel poses with shareholders Friday, May 3, 2024, in Omaha, Neb. Abel is set to be the next CEO after Warren Buffett is gone. (AP Photo/Josh Funk)

Experts say the company has a solid culture built on integrity, trust, independence and an impressive management roster ready to take over.

From left, D’Ann Rhoten takes a photo of Brittany Thornton and Melissa Shapiro in the exhibit hall of the Berkshire Hathaway annual meeting on Saturday, May 4, 2024, in Omaha, Neb. (AP Photo/Rebecca S. Gratz)

“Greg’s a rock star,” said Chris Bloomstran, president of Semper Augustus Investments Group. “The bench is deep. He won’t have the same humor at the meeting. But I think we all come here to get a reminder every year to be rational.”

See’s Candies associates, including Holly Pellicano of San Francisco, center, do yoga together before shareholders arrive for the Berkshire Hathaway annual meeting on Saturday, May 4, 2024, in Omaha, Neb. (AP Photo/Rebecca S. Gratz)

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