Warren Buffett's Berkshire Hathaway opened its annual shareholder meeting by reporting strong first-quarter profits.
Based in Omaha, Nebraska Berkshire adds $21 billion Cash and Treasuries are piling up, reaching a record $189 billion last quarter, an increase of 13% in just three months. Berkshire's operating income increased 39% year-over-year to $11.22 billion, driven by an 185% year-over-year increase in underwriting revenue from $911 million to $2.6 billion. During a Q&A session with shareholders Saturday morning, Buffett said the insurance business is “Berkshire's most important business.”
During the quarter, Berkshire sold a net $17 billion worth of stock and repurchased $2.6 billion worth of stock, up from $2.2 billion in the previous quarter.
of Highly Anticipated and Featured Annual ConferenceThe event, dubbed “Woodstock for capitalists” by fans, opened Friday in Buffett's hometown of Omaha, Nebraska. Shareholders wait all year long for a chance to hear directly from the 93-year-old Buffett, known as the Oracle of Omaha. In the first meeting without Buffett's right-hand business partner and friend Charlie Munger, Buffett's vice-chairman Ajit Jain and Greg Abel joined the panel.
Here are some of the biggest takeaways from Saturday's marathon Q&A session.
Buffett and Berkshire continue to sell Apple stock
Berkshire's Apple holdings were valued at $135.4 billion as of the first quarter of 2024, down 22% from $174.3 billion as of December 31, 2023. The amount held by the conglomerate is the second consecutive quarter. Reduced holdings in iPhone maker.
Apple's stock price fell 11% in the quarter. Tech giant endured tough start to 2024.
But Buffett said it's “very likely” that Apple will remain Berkshire's largest common stockholder, and unless something drastic happens, the company will remain its largest holding. Stated.
“Unless something bad happens, after Greg takes over this company, we will own Apple, American Express, and Coca-Cola,'' Buffett said of his hand-picked successor. He mentioned a certain Mr. Abel.
Berkshire reported that its American Express stock was worth $34.5 billion last quarter, and its Coca-Cola holdings were worth $24.5 billion. Chevron and Bank of America were also among the company's top five holdings.
Charlie Munger's influence
Munger has served as Berkshire's vice chairman since 1978. died in november, just a few weeks before his 100th birthday. He was considered Buffett's right-hand man and most trusted advisor.
His presence was very much felt at this year's conference. Prior to the start of the session, CNBC aired a tribute to Munger. In response to several questions, Mr. Buffett recalled his relationship with Mr. Munger.
“For decades, there was no one in the world to talk to better than Charlie when it came to managing money,” he said.
“Charlie, in all the years we've worked together, not only have you never lied to me, you've never even made things work, so it's half lies, half lies. “I said, 'I wanted to go,' stacking the deck in my direction,” Buffett said.
He also said he had “complete” trust in his children and wife.
“But that doesn't mean I'm asking you which stocks to buy,” he joked. Without Munger, he monologues about investing.
When Buffett was asked what he would do if he had one more day with Munger, Buffett said, “I would probably do the same thing.” [they] I did it in the early days. ”
“We have always lived a life where we were satisfied with what we did every day,” he said. “We had so much fun doing everything. We played golf together, we played tennis together, we did everything together.”
Tesla's self-driving car claim
GEICO Auto Insurance became a wholly owned subsidiary of Berkshire in 1996 and has been a significant revenue driver ever since. In the first quarter, GEICO gave the conglomerate his $10.2 billion in revenue.
The future of self-driving cars raises questions about the impact on insurance revenue. Tesla CEO Elon Musk Said self-driving car It has the potential to reduce accidents by 50% compared to human drivers.
“A 50% reduction in accidents would be good for society, but it would be bad for insurance companies' volume,” Buffett said. “But what we want is good for society.”
Jain, head of Berkshire's insurance business, was skeptical.
“Tesla has been exploring the idea of writing insurance, either directly or indirectly, without much success so far,” Jain said. “Time will tell, but I think automation will just shift a lot of the cost from the operator to the equipment provider.”
Succession planning and attacks on presidential candidates?
As for Berkshire's leadership changes, Mr. Buffett has already turned over much of the day-to-day operations to Mr. Abel and Mr. Jain, making them central figures in most of the management team.
“Here, if something were to happen to me, I'd be pretty good the next day. I wouldn't get any phone calls,” Buffett said.
Mr. Abel is Berkshire Hathaway Energy's Chairman and CEO and Vice Chairman of Non-Insurance Operations. Planned to become CEO as Buffett's successor.
Asked about the possibility of investing in India, Buffett said investors need to wait and see how future management strategizes. “Fortunately, it doesn't take that long to wait,” he joked, noting several times that the pace has slowed.
“I shouldn't sign a four-year employment contract, as some people in this world do, at an age when you have no idea what you'll be doing in four years,” he said. It's an obvious jab at President Joe Biden and former President Donald Trump, who are 81 and 77 years old, respectively, and who are facing each other in a 2024 rematch campaign.
The AI genie is “part way out of the bottle”
Buffett quipped, “I don't know anything about AI.” He said: artificial intelligence For his views last year, when he said nuclear weapons were a dangerous genie that could not be put back in the bottle.
AI “is out of the bottle, but it's very important and someone will make it happen,” he said. “We might wish we had never seen the genie. Or we might do something amazing.”
He said he had one experience with AI that made him “a little nervous.” It involved watching an AI-generated video of yourself speaking.
“As someone who doesn't understand anything about it, I think it has the potential for good and very high potential for harm,” he said. “And we don't know how that's going to play out.”