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Warren Buffett, often referred to as the “Sage of Omaha,” is a legendary figure in the investment world. This is largely due to his role as CEO and Chairman of Berkshire Hathaway Inc (NYSE: BRK.B), a conglomerate that has delivered significant long-term value to its shareholders. As one of the most prominent and respected investors globally, the market pays close attention to Mr Buffett’s comments whenever Berkshire Hathaway announces its earnings. The company recently announced its Q1 2024 earnings on Saturday, 4 May. Here are five key takeaways from its latest quarterly results that investors will have noted. It is widely known that Apple is Berkshire Hathaway’s largest investment. However, during the first quarter of 2024, the company reduced its stake in the tech giant by 13%, ending the quarter with 790 million shares. This marked a substantial decrease from the 905 million shares held at the end of 2023. At Berkshire Hathaway’s annual meeting, Warren Buffett cited tax considerations following significant gains in the company’s investment in Apple as the primary reason for the reduction in holdings during the quarter. Despite a decline in Apple’s share price during the first quarter, Berkshire Hathaway has benefited considerably from its initial investment. The company first purchased Apple shares in 2016 and built up most of its current position over the next two years. Berkshire Hathaway initially paid an average of US$35 per share for Apple. As of the most recent closing on Friday, 10 May, Apple’s shares stood at US$183.05, demonstrating the success of Berkshire’s investment strategy. Warren Buffett’s metaphorical “elephant gun,” referring to Berkshire Hathaway’s readiness to use its substantial cash reserves for large-scale investments, remained inactive in the first quarter of 2024. The company’s cash position swelled by over US$20 billion during this period. As of 31 March 2024, Berkshire Hathaway reported cash and cash equivalents totalling US$189 billion, a significant increase from US$167.7 billion at the end of 2023. This rise primarily reflects the net sales of stock amounting to over US$17 billion during the quarter, with a considerable portion from the sale of Apple shares. A significant portion of Berkshire’s cash, over US$150 billion, is invested in US Treasuries, which currently yield 5% or more. Based on these holdings, Buffett anticipates that the company’s cash reserves could approach US$200 billion by the end of the second quarter. The higher interest rates prevailing in recent years have significantly enhanced the earnings from Berkshire’s cash reserves. In Q1 2024 alone, the company earned US$1.9 billion in interest income, showcasing the effectiveness of its cash management strategy amidst changing economic conditions. Berkshire Hathaway witnessed a robust quarter from its insurance operations, significantly contributing to the overall operating profits. In the first quarter of 2024, the company’s operating profits surged by 39% year-on-year, reaching a record US$11.2 billion, up from US$8.06 billion in the corresponding period last year. Geico, one of Berkshire’s flagship insurers, was a key player in this success, particularly known for its auto insurance. Geico implemented higher rates for its customers and experienced a decrease in claims, factors that together substantially boosted its financial performance. Pre-tax profit at Geico more than doubled compared to the previous year, reaching US$1.93 billion for Q1 2024. In the first quarter of 2024, Berkshire Hathaway intensified its share repurchase programme, spending US$2.6 billion to buy back its own shares. This marked an increase from the US$2.2 billion spent on share buybacks in the fourth quarter of 2023. The recent repurchases represented the 23rd consecutive quarter in which Berkshire Hathaway has bought back its shares. This consistency underscores the company’s commitment to utilising buybacks as a primary method of returning value to its shareholders. Over the past six years, Berkshire Hathaway has invested more than US$77 billion in repurchasing its shares. As Berkshire Hathaway does not pay dividends, share buybacks are expected to remain the main mechanism for returning capital to shareholders. This approach aligns with Warren Buffett’s strategic preferences for capital allocation and shareholder value enhancement. At the annual meeting, where Berkshire Hathaway’s Q1 2024 results were discussed, Warren Buffett highlighted India’s investment potential. His previous success in Japan, particularly with the major trading houses, prompted inquiries about his views on India’s market opportunities. Buffett acknowledged the existence of “loads of opportunities” in India. However, he expressed caution by questioning whether Berkshire Hathaway holds any particular advantage in insights or contacts that could facilitate unique transactions, making them appealing to parties in India who would desire Berkshire’s involvement. Describing his investment experiences in Japan as “fascinating,” Buffett drew parallels while considering future prospects in India. However, he suggested that the decision to pursue these opportunities might not be his to make. Indicating a shift towards a more dynamic approach, he mentioned that exploring potential investments in India might be a task for a “more energetic management” at Berkshire, pointing to a possible transition in leadership roles concerning investment decisions. It's free! Don't miss out on the latest financial market movements. 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