(Reuters) — Warren Buffett’s Berkshire Hathaway Inc reported a first-quarter profit of $35.5 billion on Saturday, reflecting gains from stocks such as Apple Inc, while higher investment income and a recovery at auto insurer Geico boosted operating profit.
Berkshire also stepped up buybacks of its own stock, buying back $4.4 billion, while paring its investments in other stocks such as Chevron Corp., which remains a large holding.
The results were released ahead of Berkshire’s annual shareholder meeting in Omaha, part of a weekend that draws tens of thousands of people to the city.
Mr. Buffett, 92, has run Berkshire since 1965, turning it from a struggling textile company into a conglomerate with dozens of businesses including Geico, the BNSF railroad, Berkshire Hathaway Energy and manufacturing and retail units including See̵7;s Candies and Dairy Queen ice cream.
The diversification has attracted many investors, not just fans of Mr. Buffett, seeing Berkshire as a stable long-term investment even amid recession fears and concerns about the banking sector.
Net income was $24,377 per Class A share, up from $5.58 billion, or $3,784 per share, a year earlier.
That partly reflected a 27% jump in Apple’s share price, leaving Berkshire with a $151 billion stake in the iPhone maker.
An accounting rule requires Berkshire to report unrealized gains and losses with net income, and Mr. Buffett urges investors to ignore the resulting volatility.
Quarterly operating profit rose 13% to $8.07 billion, or about $5,561 per A share, from $7.16 billion.
Those results benefited from Geico taking six-quarters of insurance losses and a 68% increase in how much Berkshire’s insurance units generate from investments.
Geico’s pretax insurance profit was $703 million, benefiting from higher premiums, fewer crashes and a significant reduction in advertising spending, which may have led to fewer high-risk drivers seeking coverage.
Berkshire’s cash hoard grew by $2 billion in the quarter to $130.6 billion, as the company sold $13.3 billion worth of stock and bought just $2.9 billion.
Chevron appears to have been among the sellers, with Berkshire’s stake falling 28% to $21.6 billion, although the oil company’s share price fell just 9%.
Berkshire also owns a 23.6% stake in another oil company, Occidental Petroleum Corp.
Its share sale more than offset the $8.2 billion Berkshire spent to increase its stake in truck stop operator Pilot Travel Centers to 80% from 38.6%, leaving the founding Haslam family with 20%. The increase was expected.
The effect of forest fires
BNSF railroad profit fell 9% to $1.25 billion, hurt by higher fuel costs and lower freight volumes.
Berkshire Hathaway Energy, normally a steady income generator, saw profits drop 46% as it set aside $359 million for legal and other costs from wildfires in Oregon and northern California, where it has several operations, in 2020.
Operating income also reflected October’s purchase of insurance holding company Alleghany Corp., while net income included a gain related to Pilot.
Berkshire’s Class A shares are up 4.9% this year, trailing the Standard & Poor’s 500’s 7.7% gain. The index trailed Berkshire by 23.4 percentage points in 2022, excluding dividends.