Berkshire Hathaway’s cash pile hits record $189 billion as Buffett dumps stocks

Omaha, Nebraska: Berkshire Hathaway’s cash pile swelled to a record $189 billion in the first quarter of 2024 as Warren Buffett’s sprawling conglomerate continued to dump stocks, including Apple, one of its largest positions.

The figure underscores the difficulty the billionaire investor and his team have had in trying to find worthwhile investments, as well as the relative allure of the high yield on US government debt.

The company on Saturday disclosed it had sold just under $20 billion-worth of stocks in the first three months of the year, buying $2.7 billion over the same period. As a result the value of its stock portfolio slipped to $336 billion, from $354 billion at year-end.

The filing with US securities regulators indicated that Berkshire had sold a significant portion of its stake in Apple, which had become a core holding for the Omaha-based business since one of Buffett’s deputies first invested in 2016.

The company said its position in the iPhone maker was worth $135.4 billion in the first quarter, down from $174.3 billion at the end of 2023, suggesting it had sold more than 100 million shares in the company at the start of the year. Berkshire started to pare its holdings in Apple in late December, selling roughly 10 million shares.

Buffett has long heaped praise on Apple’s management team and in 2022 he described the company as one of Berkshire’s “four giants”, alongside its insurance operations, the BNSF railroad and its energy and utility business Berkshire Hathaway Energy.

Tim Cook, Apple’s chief executive, told CNBC that Buffett had told him about the stock sales on Friday. Cook added that it was still “a privilege to have Berkshire as a shareholder”.

The figures come as Berkshire shareholders gather in Omaha, Nebraska, for the company’s annual meeting, dubbed the Woodstock of capitalism. It is the first time Buffett will take to the stage since his longtime business partner Charlie Munger died in November.

Berkshire reported solid earnings in the first quarter, driven almost entirely by improvements in its insurance businesses as well as a boost from higher interest rates. Operating profits across the company jumped 39 percent from the year before to $11.2 billion.

The company disclosed that its auto insurer Geico had passed along higher rates to customers and had suffered fewer claims, lifting its results. The unit has scaled back its footprint since the pandemic after it suffered a period of losses.

Auto insurers across the US had struggled with the high replacement costs of new cars, exacerbated by supply chain issues and surging inflation.

Geico, which is led by one of Buffett’s top investment deputies, cut millions of policies in a drive to return to profitability. The move has been successful. Pre-tax profits at Geico more than doubled from a year ago to $1.93 billion. The unit also signalled its retrenchment could be near its end, saying that “the rate of decline” had slowed and it was winning new business.

The company has also benefited from the US Federal Reserve’s decision to raise interest rates in a bid to quell inflationary pressures. Berkshire said it earned $1.9 billion in the quarter in interest income from its cash pile, which is largely invested in short-term Treasuries.

Over the past year, it has earned almost $7 billion on that portfolio.

Overall, Berkshire said it generated a net profit of $12.7 billion in the first quarter, down 64 percent from $35.5 billion a year earlier.

Buffett has long discouraged his shareholders from relying on the company’s net income figures — calling them “meaningless” — as they are affected by swings in value of its stock portfolio from quarter to quarter. It can result in huge losses or profits that do not reflect the underlying business performance.

Berkshire’s results are typically pored over by investors, given the company employs nearly 400,000 people and touches almost every part of the US economy. The results were generally upbeat and pointed to an improving US outlook.

Sales at Precision Castparts, an aeroplane parts manufacturer that supplies Boeing, jumped 10 percent to $2.5 billion. Sales at Berkshire’s home building group, which includes the modular home builder Clayton Homes and roofing maker Johns Manville, also rose.

The BNSF railroad’s revenues fell 4.1 percent, almost entirely driven by lower shipments of coal. The unit, which has more than 32,000 miles of track criss-crossing the US, said it had shipped more consumer and agriculture products than previously.

Shares of Berkshire have climbed 11 percent this year, outpacing the 8 percent total return of the S&P 500. Berkshire has not paid a dividend since the 1960s.