Warren Buffett’s Berkshire Hathaway sold billions of dollars worth of stock and invested little money in the US equity market in the first three months of the year, as the famed investor saw little appeal in a volatile market.
Berkshire disclosed on Saturday that it had sold shares worth $13.3bn in the first quarter and bought stocks for a fraction of that figure. Instead, it put $4.4bn towards repurchasing its own stock, as well as $2.9bn on the shares of other publicly traded businesses.
The figures underscore the struggle Berkshire faces in putting its mountain of cash to work at a time when Buffett and his longtime right-hand man Charlie Munger regard valuations as unappetising. The company’s cash pile has risen by $2bn since the start of this year to $130.6bn, its highest level since the end of 2021.
Munger last month told the Financial Times that investors should reduce their expectations for stock market returns as the Federal Reserve raises interest rates and the economy slows.
Berkshire reported a profit of $35.5bn in the first quarter, or $24,377 per class A share, largely driven by a rally in stocks that lifted the value of its $328bn portfolio of shares. Profit was up from $5.6bn a year before.
Operating earnings — Buffett’s preferred performance measure for Berkshire’s diverse group of businesses — rose 12.6 per cent from the year before to $8.1bn. For the first time the figure includes the results of truck stop business Pilot Flying J, which Berkshire took majority control of in January.
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The results are often scrutinised given the cross-section of the country Berkshire’s dozens of businesses touch, including in energy, logistics, housing and manufacturing.
One of Berkshire’s crown jewels, the Geico auto insurer, swung to an underwriting profit after six consecutive quarters of losses. The company said that scaling back advertising and raising policy rates had helped the unit generate a $703mn underwriting profit.
The impact of higher interest rates and slower economic growth was evident across…
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