Berkshire Profit Falls 64% on Portfolio Holdings as Buffett Sells Apple

OMAHA, Neb. (AP) — Berkshire Hathaway’s first-quarter profits plummeted along with the real value of its investments, but the company said on Saturday that most of the companies he owns have performed well.

The company reported profit of $12.7 billion, or $8.825 per Class A share, for the quarter. That’s about a third of last year’s $35.5 billion, or $24,377 per A share.

The numbers were heavily influenced by a large drop in the value of Berkshire’s investments. Buffett encourages investors to pay more attention to the conglomerate’s operating profits to the exclusion of investment numbers. Operating profits jumped 39% to $11.222 billion from last year’s $8.065 billion as its insurers reported strong results.

On a per share basis, this year’s first quarter operating value equates to $7,796.47 per Class A share, exceeding the estimates of three FactSet Research analysts, who predicted $6,701.87 per Class A share.

Buffett sold $17 billion worth of stock during the quarter, including cutting about 13% of Berkshire’s massive stake in Apple. At $135.4 billion, the iPhone maker still accounts for the largest share of Berkshire’s $364 billion portfolio. Buffett said he expects it to remain that way until his successor, Greg Abel, takes over.

The estimated value of Berkshire’s stake in Apple suggests Buffett sold more than 100 million shares. In the past, Buffett has said he invested in Apple shares because of consumers’ devotion to the company’s products, similar to consumer brands he loves, such as Berkshire’s own See’s Candy.

Apple CEO Tim Cook, who is at the Berkshire meeting, told CNBC that he still considers it a privilege to have Berkshire as a majority shareholder, and he knew about the sales before Berkshire disclosed them on Saturday.

Berkshire reported underwriting profit of $2.6 billion across its insurers, up from $911 million the previous year, as Geico, in particular, continued to improve its results. However, BNSF railroad profits fell 8% to $1.143 billion.

Most of Berkshire’s many other companies posted solid results, including a 72% jump in the utilities unit’s operating profits, adding $717 million to Berkshire’s total.

Revenue grew 5% to $89.87 billion in the quarter. The two analysts who reported estimates to FactSet predicted $87.044 billion.

With no major acquisitions in sight, Berkshire’s cash flow rose to a record $188.993 billion, even after spending $2.6 billion on share buybacks during the first three months of the year. Holdings including insurance company Geico, railroad BNSF, several large utility companies and a variety of dozens of others continue to generate mountains of cash.

“We’d love to spend it, but we won’t spend it unless we do something with very little risk and will make us a lot of money,” Buffett said.