Warren Buffett tours the grounds of the Berkshire Hathaway annual shareholders’ meeting in Omaha, Nebraska.
David A Grogan | CNBC
OMAHA, Neb. — Berkshire Hathaway shares rose Monday as Warren Buffett’s conglomerate wooed investors over the weekend with a strong earnings report and a revealing “Woodstock for Capitalists.”
Berkshire A shares rose 2% on Monday to hit an intraday high of $502,055. Monday’s rally extended the stock’s year-to-date gains to more than 6%.
For the first quarter, the Omaha-based conglomerate reported a 12.6% increase in operating profits, which includes gains from a range of companies ranging from insurance to railroads and utilities to Dairy Queen.
The strong performance was fueled by a rebound in Berkshire’s insurance business, particularly auto insurer Geico. Earnings also rose sharply, thanks in part to gains in its stock portfolio, led by Apple.
“We continue to believe that BRK shares are an attractive play in an uncertain macro environment,” said Brian Meredith, a Berkshire analyst at UBS, who also raised full-year earnings estimates following the Q1 report.
Berkshire also repurchased $4.4 billion of stock — the most since the first quarter of 2021 — up from $2.8 billion at the end of last year.
Geico’s surprising recovery
Geico, the crown jewel of Berkshire’s insurance empire and Buffett’s favorite child, took a big turnaround in the quarter, returning to an underwriting profit of $703 million. The auto insurer suffered a $1.9 billion pretax underwriting loss last year as it sacrificed market share to rival Progressive.
Ajit Jain, Berkshire’s vice chairman of insurance operations, said Saturday that auto insurer Geico is “taking the bull by the horns” to improve its use of telematics. Geico has reached a point where about 90% of new companies have telematic input on pricing decisions, Jain said.
Telematics programs allow insurers to collect their customers’ driving data, including mileage and speed, to support pricing policy.
Best meeting in years
This year’s Annual Meeting attracted a full house of enthusiastic attendees to Omaha, with international travelers up approximately 20% from last year. The 92-year-old “Oracle of Omaha,” along with his right-hand man, 99-year-old Charlie Munger, answered nearly 50 questions from shareholders.
“We considered Berkshire’s 2023 Annual Meeting to be the best in several years, with quality questions and insightful answers,” said Meredith.
The legendary duo have spoken out on a variety of topics, from the banking crisis to the state of value investing to specific stocks they own and the threat of artificial intelligence.
“Watching Buffett and Munger for hours was another master class and, as always, an invaluable education,” said Peter Boockvar, Bleakley Financial Group’s chief investment officer.