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“Woodstock for Capitalists”
The Berkshire Annual Meeting

Berkshire Hathaway is the largest investment position held by Hendershot Investments, Inc., an investment management firm. Ingrid Hendershot, a value-oriented money manager and editor of Hendershot Investments provides the following review of the Berkshire Annual Meeting.

Also, readers can view the entire Berkshire’s 2023 Annual Shareholder Meeting by clicking here.

Berkshire Hathaway (BRKB) reported the company’s net worth during the first quarter of 2023 increased by 6.6%, or $31.1 billion, to $504.6 billion with book value equal to about $348,000 per Class A share as of 3/31/23. Berkshire boasts the largest shareholders’ equity of any U.S. company.

On a GAAP basis, Berkshire reported net earnings of $35.5 billion during the first quarter compared to $5.6 billion in earnings in the prior year quarter. Investment gains and losses from changes in the market prices of Berkshire’s substantial equity investments will produce significant volatility in earnings.

Berkshire’s five major equity investment holdings which represent about 77% of total equities held, include American Express at $25.0 billion (which charged 12% higher during the quarter or $2.6 billion); Apple at $151 billion (which jumped 27% during the quarter or a juicy $32 billion); Bank of America at $29.5 billion (which declined 14% or $4.7 billion in value due to banking woes during the quarter); Coca-Cola at $24.8 billion (which slipped 2% or $600 million) and Chevron at $21.6 billion (which was 28% lower or $8.4 billion in value, reflecting partial sales of the position and lower oil prices).

During the first quarter, Berkshire’s revenues rose 20.5% to $85.4 billion during the quarter, aided by the $9.5 billion contribution from Pilot Travel Centers which was consolidated into Berkshire’s results following the acquisition of Berkshire’s additional 41.4% ownership interest in the company, bringing Berkshire’s total ownership in Pilot to approximately 80%. Berkshire’s operating earnings increased 12.6% during the first quarter to $8.1 billion, led by a turnaround in Berkshire insurance business.

During the first quarter, Berkshire’s insurance businesses generated $911 million from underwriting earnings compared to $167 million in the prior year quarter due to improvements at GEICO and the Berkshire Hathaway Primary Group, which included the acquisition of Alleghany Insurance. Insurance investment income increased 68% during the quarter to nearly $2 billion, reflecting higher dividend and interest income as interest rates increased significantly. The float of the insurance operations increased $1 billion to end the quarter at about $165 billion. The combined cost of float was negative during the first quarter due to the $1.2 billion in pre-tax underwriting gains during the quarter.

Burlington Northern Santa Fe’s revenues chugged 2% higher during the quarter to $5.9 billion, reflecting higher revenue per car/unit from higher fuel surcharges and increased rates. Net earnings dropped 9% to $1.2 billion due to a 10% decrease in overall freight volumes and higher average fuel and other operating costs.

Berkshire Hathaway Energy reported revenues rose 7% during the quarter to $6.5 billion with net earnings charging 46% lower to $416 million. The decrease reflected lower earnings from the U.S. regulated utilities, other energy businesses and the real estate brokerage business.

Berkshire’s Manufacturing businesses reported first quarter revenues dipped 0.7% to $18.3 billion with operating earnings down 8% to $2.6 billion. The industrial products segment led the way for the quarter with revenues rising 19% to $8.9 billion and operating earnings also increasing 19% to $1.4 billion thanks to improvements at Precision Castparts, Lubrizol, IMC and Marmon including acquisitions as part of the Alleghany deal.

However, the results of the building products and consumer products segments generally deteriorated during the quarter with revenue and earnings down in both segments. Given the significant increase in interest rates, including home mortgage rates, demand has slowed for Berkshire’s home building businesses which are expected to experience declines in revenues and earnings for the balance of 2023. In the consumer products segment, weakness in demand for recreational vehicles at Forest River due in part to rising interest rates and supply chain issues in the apparel group contributed to lower sales and earnings. The weakness in both groups is expected to persist in the near term.

Service and Retailing revenues increased 6% during the quarter to $23 billion with pre-tax earnings increasing 10% to $1.3 billion. The Service group led the way as revenue increased 18% to $5.3 billion with pre-tax earnings up 16% to $837 million thanks to increased revenue from aviation services, the impact of a $302 million acquisition and increased revenue from TTI, a distributor of electronic components. New orders slowed at TTI, in part, attributable to elevated inventory levels within the supply chain, which may lead to lower revenues in future periods.

Berkshire’s balance sheet continues to reflect significant liquidity and a very strong capital base of $504.6 billion as of 3/31/23. Excluding railroad, energy and utility investments, Berkshire ended the year with $504.8 billion in investments allocated approximately 65.0% to equities ($328.2 billion), 4.6% to fixed-income investments ($22.5 billion), 25.2% in cash and equivalents ($127.7 billion) and 5.2% in equity method investments ($26.4 billion), which includes 26.5% ownership of Kraft Heinz and 23.5% ownership of Occidental Petroleum. Warren Buffett noted at the annual meeting he has no plans to acquire Occidental Petroleum.

Free cash flow increased 33% during the quarter to nearly $5 billion due to higher earnings. During the quarter, capital expenditures approximated $3.7 billion, which included $2.6 billion for BNSF and BHE, its railroad and utility and energy units. Berkshire expects capital expenditures for the remainder of 2023 for BNSF and BHE to approximate $11.7 billion. During the first quarter, Berkshire paid cash of $2.9 billion to acquire equity securities and received proceeds of $13.3 billion from the sale of stocks. In addition, Berkshire purchased a net $7.2 billion in Treasury Bills and fixed-income investments. On January 31, 2023, Berkshire acquired an additional 41.4% interest in Pilot for approximately $8.2 billion which brought Berkshire’s ownership of Pilot up to 80%.

Berkshire repurchases its shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett and Charlie Munger. During the first quarter, Berkshire repurchased $4.5 billion of its common stock. These repurchases included 4,386 Class A shares purchased at an average price of approximately $465,791 per share and 4,500,593 Class B shares purchased an average price of $305.57 per share during March 2023.

Editor’s Note: Ingrid Hendershot, CFA is the founder and president of Hendershot Investments Inc., an investment management firm established in 1994. She is also the editor of Hendershot Investments, a quarterly investment newsletter 1 year, $50, designed for long-term investors seeking capital growth at reasonable valuations. For services offered by Hendershot Investment, visit

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