01—Abstract
Summary
Summary of the 8-K filed May 7, 2024. Cited figures are marked; the original filing is the authoritative source.
Berkshire Hathaway reported first-quarter 2024 results that were driven by a sharp swing in investment gains and losses rather than by operating performance.
Net earnings attributable to Berkshire shareholders fell to $12.7 billiona from $35.5 billion a year earlier. The decline reflects roughly $9.7 billion of after-tax losses from changes in unrealized gains on equity holdings, partly offset by about $11.2 billion of realized investment gains. The company's own release cautions that quarterly investment gains or losses are usually meaningless for assessing business performance.
Operating earnings, which exclude investment gains and losses, rose about 39% to $11.2 billionb from $8.1 billion. The improvement came mainly from insurance underwriting, which swung to $2.6 billion from $0.9 billion, and from higher insurance investment income and Berkshire Hathaway Energy. BNSF's earnings declined to $1.1 billion from $1.2 billion.
Insurance float was about $168 billionc at quarter-end, and Berkshire spent roughly $2.6 billion repurchasing Class A and Class B shares during the quarter. At the May 4, 2024 annual meeting, shareholders re-elected all 14 directors.
All six shareholder proposals on climate, DEI, railroad safety, Energy Policy Research Foundation modeling, and China exposure were defeated by wide margins, which is consistent with management's position on those issues. Investors should focus on the operating earnings trend, the buyback activity, and the reliance of reported net income on mark-to-market equity holdings when evaluating the quarter.
02—Key points
Key Highlights
- Net earnings attributable to Berkshire shareholders were $12.7 billion in Q1 2024, down from $35.5 billion in Q1 2023, largely due to a much smaller investment gain.
- Operating earnings rose about 39% year over year to $11.2 billion from $8.1 billion, excluding investment gains and losses.
- Investment gains were $1.5 billion overall, including about $9.7 billion of after-tax unrealized losses on equity holdings offset by about $11.2 billion of realized gains.
- Insurance underwriting earnings increased to $2.6 billion from $0.9 billion, the largest driver of the operating earnings improvement.
- Per-share results fell: $8,825 per Class A share versus $24,377, and $5.88 per Class B share versus $16.25.
- Berkshire repurchased about $2.6 billion of its stock in Q1 2024, and insurance float stood at roughly $168 billion at March 31, 2024.
- All directors were re-elected at the May 4, 2024 annual meeting, and all six shareholder proposals were defeated.
03—Questions
Frequently Asked Questions
Why did Berkshire's net earnings fall so sharply in Q1 2024?
The decline mainly reflects investment results. Q1 2023 included about $23.4 billion of gains on unrealized equity holdings, while Q1 2024 included about $9.7 billion of losses on the same type of holdings. Realized gains of $11.2 billion in Q1 2024 partly offset this. Berkshire notes that these swings are not indicative of quarterly business performance.
How did Berkshire's core operating businesses perform?
Operating earnings increased to $11.2 billion from $8.1 billion. Insurance underwriting improved substantially to $2.6 billion from $0.9 billion, and Berkshire Hathaway Energy rose to $717 million from $416 million. BNSF declined modestly to $1.1 billion from $1.2 billion, and non-controlled businesses fell to $405 million from $568 million.
Is Berkshire buying back its own stock?
Yes. The company used approximately $2.6 billion to purchase Class A and Class B shares during the first quarter of 2024. This is a meaningful capital allocation signal, since it indicates management sees value in its own shares at prevailing prices.
What did shareholders decide at the 2024 annual meeting?
All 14 director nominees were elected, with support in the mid-to-high 80 percent range for the directors with the most withheld votes. All seven agenda items were voted on, and the six shareholder proposals on climate reporting, DEI, railroad safety, EPRF-based financial modeling, and China dependence all failed, with opposition far exceeding support.
04—Continue