Berkshire shares rise as investors applaud Geico earnings and recovery

Warren Buffett visits the venue during Berkshire Hathaway’s annual shareholders meeting in Omaha Nebraska.

David A. Grogan | CNBC

OMAHA, Neb. – Berkshire Hathaway shares rose on Monday as Warren Buffett’s conglomerate wowed investors with a strong earnings report and insightful “Woodstock for Capitalists” over the weekend.

Berkshire’s Class A shares climbed 2% on Monday, hitting an intraday high of $502,055. Monday’s rally extended the stock’s year-to-date gains to over 6%.

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For the first quarter, the Omaha, Nebraska-based conglomerate reported a 12.6% increase in operating profits, which encompass profits earned by a range of businesses, from insurance to railroads. railway, and utilities at Dairy Queen.

The strong performance was driven by a rebound in Berkshire’s insurance business, particularly car insurer Geico. Earnings also rose sharply thanks in part to gains in its equity portfolio, led by Apple.

“We continue to believe BRK shares are an attractive game in an uncertain macro environment,” said Brian Meredith, Berkshire analyst at UBS, who also raised full-year earnings estimates following the first-quarter report.

Berkshire also repurchased $4.4 billion worth of shares – the most since the first quarter of 2021 – from $2.8 billion at the end of last year.

Geico’s surprise recovery

Geico, the crown jewel of Berkshire’s insurance empire and Buffett’s “favorite child,” saw a big turnaround in the quarter, returning to an underwriting profit of $703 million. The car insurer suffered a $1.9 billion pre-tax underwriting loss last year as it sacrificed market share to competitor Progressive.

Ajit Jain, Berkshire’s vice president of insurance operations, said on Saturday auto insurer Geico was “taking the bull by the horns” to improve the use of telematics. Geico has reached a point where about 90% of new businesses have telematics input on pricing decisions, Jain said.

Telematics programs allow insurers to collect customer driving data, including their mileage and speed, to help with policy pricing.

Best meeting in years

This year’s annual meeting drew a packed house of enthusiastic attendees to Omaha, with international travelers up about 20% from last year. The 92-year-old “Oracle of Omaha” and 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,” Meredith said.

The legendary duo commented on a variety of topics, from the banking crisis and the state of value investing, to the specific stocks they own and the threat of artificial intelligence.

“It was another masterclass watching hours of Buffett and Munger and an invaluable education as always,” said Peter Boockvar, Chief Investment Officer of Bleakley Financial Group.


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