Berkshire Hathaway (BRKA 0.22%) (BRKB 0.53%) has reported on its first quarter under new CEO Greg Abel, marking a new era for the conglomerate. For now, though, not much has changed.
Berkshire once again ended the quarter with a stockpile of cash, which rose to more than $397 billion from $373 billion at the end of December. That was a new record for the company, even after it restarted its stock buyback plan in March.
In total, the company spent around $234 million on buybacks in the quarter, repurchasing 33 of its Class A shares and 431,462 of its Class B shares. It was the first time the company had repurchased shares since May 2024. Still, it's a far cry from the approximately $17 billion in stock it repurchased from 2022 to 2023.
NYSE: BRKB
Key Data Points
Meanwhile, Berkshire continued to be a net seller of stocks in the quarter, continuing the same trend as under former CEO and legendary investor Warren Buffett. The company bought nearly $16 billion in stock in the quarter, while selling $24 billion's worth.
Overall, Berkshire saw solid first-quarter results, with operating income climbing 18% to $11.3 billion, helped by a 29% surge in insurance underwriting profits. However, much of that was due to an easy comparison, since last year, it was hit with a large payout related to the California wildfires. Meanwhile, GEICO struggled in the quarter, and Abel said the insurer needs to get "the price-to-risk right" to reignite growth.
Heading his first annual meeting, Abel said there were no plans to break up Berkshire or divest any of its subsidiaries, saying it was an efficient conglomerate without unnecessary layers of management. He also said the company would not embrace artificial intelligence (AI) just for the sake of using AI and that it had to be additive to its business.
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Is Berkshire stock a buy?
The cash continues to pile up at Berkshire, and there appears to be no rush to use it. At the meeting, Buffett, now chairman, said the current investment environment was not ideal and talked about how much of a gambling atmosphere he is seeing, with heavy options trading and the prediction markets.
At the same time, Berkshire also looks like it is going to slow-play it with AI, although Abel did say at some point the company would become a builder of tech, not just a buyer. However, this is certainly not the company's expertise, and it also has had a prior lack of investments in tech companies outside of Apple.
With Berkshire stock trading at a price-to-book (P/B) ratio of around 1.4 and sitting on a whole lot of cash during what has been a solid market, I'm not rushing in to buy shares. I think the stock will still be a fine long-term investment, but its current valuation and inaction keep me on the sidelines.
