Berkshire bought $51 billion worth of stock as Buffett battles supply chain

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OMAHA, Neb., April 30 (Reuters) – Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) plunged in stock markets in the first quarter, spending more than $51 billion on shares, including a much larger stake in Chevron Corp (CVX.N).

Berkshire, which Buffett has led since 1965, also said on Saturday that quarterly operating profit was little changed from a year earlier as some companies were able to weather supply chain disruptions. Geico, the car insurer, recorded an underwriting loss.

The Omaha, Nebraska-based company also said it repurchased $3.2 billion of its own stock during the quarter, but none in the first three weeks of April.

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The Berkshire revelations suggest Buffett has finally found significant new uses for Berkshire’s cash pile, which has shrunk by more than $40 billion to about $106 billion.

Chevron’s stake rose to $25.9 billion as of March 31 from just $4.5 billion three months earlier as oil prices soared after Russia invaded Ukraine .

This follows Berkshire’s purchase of more than $6 billion in shares of Occidental Petroleum Corp , where it already had a preferred stock stake of $10 billion.

Buffett also committed $11.6 billion to buy insurance company Alleghany Corp (YN) and bought $4.2 billion worth of HP Inc stock (HPQ.N).

Berkshire ended March with $391 billion in stock, more than half of the company’s $712 billion aggregate market value.

Other businesses include the BNSF railroad, Berkshire Hathaway Energy, and various manufacturing and retail businesses, including See’s Candies and Dairy Queen ice cream.

First-quarter operating profit edged up to $7.04 billion, or about $4,786 per Class A share, from $7.02 billion a year earlier.

Berkshire’s net income fell 53% to $5.46 billion, or $3,702 per Class A share, from $11.71 billion, or $7,638 per Class A share, a year earlier .

Net results included $1.58 billion in gains and losses from stocks including Apple Inc (AAPL.O) as well as Chevron.

An accounting rule requires Berkshire to report unrealized gains and losses with bottom line results, and Buffett urges investors to ignore the resulting volatility.

Berkshire released its results ahead of its first in-person annual shareholder meeting since 2019 in Omaha.

In its quarterly report, Berkshire alluded to the invasion of Ukraine, without mentioning it specifically, and the spread of Omicron variants of COVID-19 when discussing the supply chain issues many companies are now facing. .

“Significant supply chain disruptions and higher costs persisted into 2022,” he said. “Furthermore, the development of geopolitical conflicts in 2022 has contributed to disruptions in supply chains, driving up the costs of raw materials, goods and services in many parts of the world.”

Berkshire businesses that were affected included Precision Castparts aircraft parts, Clayton Homes mobile homes and McLane food retail.

Chip shortages were also an issue, dampening consumer shipment volume at BNSF and reducing sales volume at Berkshire Hathaway Automotive dealerships.

Revenues rose in both cases, however, with BNSF benefiting from higher fuel prices and surcharges, and revenue from car and truck sales rising because vehicles become more expensive.

Rising used car prices and shortages of spare parts also weighed on car insurer Geico, which reported an underwriting loss due to increased claims.

Earnings at Berkshire Hathaway Energy, one of Berkshire’s largest companies and a stable earnings generator, rose 7%, helped by higher margins on electric utilities and tax benefits at its MidAmerican unit Energy.

Berkshire shares have weathered recent market volatility much better than many other major US stocks. Its Class A shares have risen more than 7% this year, while the Standard & Poor’s 500 (.SPX) has fallen 13%.

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Reporting by Jonathan Stempel in Omaha, Nebraska; Editing by Catherine Evans, Ros Russell and Diane Craft

Our standards: The Thomson Reuters Trust Principles.

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