Warren Buffet's Berkshire Hathaway (BRK.A; BRK.B) posted a $35.5 billion profit and grew its cash stockpile in the first quarter as its insurance business rebounded and stock bets paid off.
- Berkshire dumped billions in stock and grew its cash pile to more than $130 billion.
- Buffett said letting SVB depositors fail would've been 'catastrophic'
- The Oracle of Omaha expressed faith in the United States despite last quarter's banking crisis and Berkshire's lack of buying.
Tens of thousands gathered at the company's annual meeting, dubbed "Woodstock for Capitalists," in Omaha, Nebraska on Saturday to hear Buffett and co-Chair Charlie Munger speak on the company's first-quarter results and the economy.
Berkshire Hathaway posted a $35.5 billion profit in the first quarter, boosted by its insurance business and Apple (AAPL) stock gains. Operating earnings at the conglomerate were $8.1 billion, 12.6% higher on the year. Berkshire dumped billions in stock in the first quarter and added $2 billion to its cash pile, signaling that the company is currently preferring cash holdings over stock investments.
Buffett was glowing in his appraisal of Apple, Berkshire's largest equity position, saying it's “better than any business” Berkshire owns outright. He added that the iPhone’s “moat” with consumers makes it an “extraordinary product.” iPhone sales held up better than expected in the first quarter, news of which propelled Apple stock up nearly 5% Friday. Buffet said selling some of the company’s stock for tax purposes a few years ago was a “dumb decision.”
Buffet and Munger gave an ominous outlook on commercial real estate, saying the sector would struggle with higher interest rates. Munger told the Financial Times last month that banks were "full" of bad commercial real estate loans, and investors should lower their expectations for stock returns.
But the pair were optimistic the sector's difficulties could present them, famous value investors, with opportunities down the line.
“In the 58 years we’ve been running Berkshire, I would say there’s been a great increase in the number of people doing dumb things, and they do big, dumb things,” Buffett said.
Berkshire is equipped to make the most of those dumb decisions. The company grew its cash stockpile to $130.6 billion, the largest it's been since 2021.
Buffett explained his decision to dump most of Berkshire's $4 billion stake in Taiwan Semiconductor (TSM), alluding to Taiwan's status as a flashpoint of tension between China and the U.S. He called TSMC "one of the best-managed and (most) important companies in the world," but said he "felt better" about the capital that was deployed by the company in Japan.
Investors also posed questions at the annual meeting about the rise of artificial technology. Buffett said that AI can "change everything in the world except how men think and behave.” Munger said he is “skeptical of some of the hype in AI,” adding that “old-fashioned intelligence works pretty well.”
Buffett, responding to a question about the U.S. debt ceiling standoff, said he doesn't see a situation where the U.S. government allows “the debt ceiling to cause the world to go into turmoil.”