Berkshire Hathaway's Cash Reserves Surge to Record $397 Billion
In the first quarter under Greg Abel as CEO, Berkshire Hathaway's cash reserves soared to a record $397 billion. The conglomerate reported a significant increase in cash holdings this quarter, following a slight decline at the end of last year, while net reducing its stock assets by $8.1 billion. At the end of the first quarter, Berkshire's net cash position was approximately $380 billion.
Abel, who succeeded legendary investor Warren Buffett as CEO this year, also restarted the stock repurchase program, returning capital to shareholders for the first time in over a year. Berkshire spent $234.2 million repurchasing its own shares this quarter.
This performance highlights Abel's gradual imprint on Berkshire's management, while also indicating that some investors remain skeptical of the new CEO. The conglomerate, with a market capitalization exceeding $1 trillion, has long outperformed the market, but its stock performance has significantly lagged the overall market since Warren Buffett announced his retirement and handed over management to Abel a year ago.
Abel had previously stated that he and Buffett both believe the company's stock has an intrinsic value higher than its current market capitalization, hence the decision to restart the repurchase. As of Friday's close, Berkshire's stock has fallen 5.9% year-to-date.
The Omaha, Nebraska-based conglomerate announced in a statement on Saturday that its operating profit for the three months to March 31 reached $11.35 billion, an increase of nearly 18% year-on-year.
Underwriting income from its insurance business surged to $1.7 billion, up approximately 29% year-on-year; the insurance business had been pressured by losses related to the Los Angeles wildfires in the same period last year.
According to anonymous sources, Abel decided to reduce stock holdings previously managed by Todd Combs, the company's former stock investment chief. JPMorgan Chase announced in December last year that it had hired Combs as a comprehensive investment advisor.