Berkshire's operating earnings increase 12% in the first quarter, cash hoard tops $130 billion

In fact, it is going to be a big day here. First, though, we should talk about the news at hand. Berkshire is out with first quarter earnings, and that came just moments ago. Mike has been digging through all of the numbers on this, and there's some stories to be told here. There are. First of all, a big swing to the upside in the overall reported earnings number from about $5.5 billion in the first quarter last year to $35.

5 billion. But almost all that swing was the mark-to-market in the investment portfolio. Operating earnings, though, is still a good story. Up almost 13% year over year, up to about a little more than $8 billion. It seems like the insurance business, specifically GEICO, swinging to a fatter underwriting profit from last year. We could talk about exactly how they got there, but it seems as if higher pricing, less advertising revenue, they went from margin as opposed to pure market share, it seems at this point. Also, on the investment side, it seems like there was a reduction in the chevron stake.

Over the course of the quarter, you have to back into the numbers based on the dollar value of the stakes that they give you in the share prices at the time. But essentially, it seems like Berkshire was a seller of about 20% of that stake. It's like $6 or $7 billion worth. So it's still a significant holding. I think it's also worth keeping in mind. Chevron stock was up over 50% last year. So simply by the market appreciating, the dollar value went up fair bit.

Well, it's interesting, though. They were selling some of that stake while they were building the oxy stake, the oxidant petroleum stake. Not a call necessarily on oil overall, just maybe picking. Exactly, relative value or positioning within that. Also, Berkshire, a net seller of overall equity securities in the quarter, but the majority of that net reduction seems to be the chevron stake. The rest of it's hard to know. Apple pretty much unchanged.

Of course, the stock's up a lot, but the position is unchanged. Bank of America also seems unchanged, too. So not a lot of change in terms of the key core holdings. For Bank of America, that's the one bank that he has kept. He's sold out of a handful of other banks. Banks, some of them that he's held for a very long time. So Bank of America still seems to be his favorite.

Maybe we'll hear more about that today. You would hope. And just maybe general thoughts about his assessment of the banking system and whether it needs help, whether it looks like it's an opportunity, you have all these valuations that have been crushed. Another thing to keep in mind for the quarter, they were $4.5 billion of shares bought back by Berkshire. So that was up from 3.2 billion in the year ago quarter.

It's not an enormous number in terms of the market value of Berkshire, which is $700 billion. It's like an 18 billion dollar annual run rate of share buyback, but they do reduce the outstanding shares. The net reduction of shares down about 1.2% year over year. So, you know, there were questions that came in. I've been looking through shareholder questions for a couple of months now that have been coming in on this. And some of the questions that came in is, do you still like Berkshire Hathaway? Do you still like the stock at this price? Are you going to be as aggressive as a buyer? And I guess this answers some of that question.

Some of it, yeah. It's absolutely not super aggressive, but it's sort of soaking up some of the shares that are out there. And of course Buffett in his shareholder letter was very vociferous about defending the practice of being able to buy back stocks. He doesn't in a disciplined way. He wants to be careful about why he's doing it and what the valuation is. But clearly he's willing to use that to. The cash went up to $130 billion, so up marginally total cash holders.

Nice pocket change. There had been a lot of questions that came into about the insurance companies, specifically GEICO, and you can see the gecko right behind us. Yeah, that's right. Over our shoulder. People just wondering what's happening. And I guess we'll dig into that a little deeper today and we've got some numbers that you've been going through. We're going to hear the color on the strategy behind it because there was a little bit of an issue last year where it seemed like profitability was done.

Now pricing is up across the industry. So policies are able to be written at higher prices. And so that's happening across the board, but it does seem, as I say in the commentary within the 10Q, that they did reduce advertising expense and it was a big swing to the upside in underwriting earnings. I mean, with insurance it takes a while to raise pricing for anybody in the industry to have to go state by state and get regulators' approvals before you can actually raise any of it. So there is a delay. We saw a huge hit to the profitability of all the insurers as prices to replace cars, prices to fix things, construction, all of that went up and they couldn't raise their prices as quickly. Exactly.

So it is an industry-wide phenomenon, but it seems as if GEICO is trying to decide they want to skew toward more profitable customers. We'll see if that's a theme that's going to continue. Another couple of tidbits are building products and consumers, margin squeeze that's happening across the industry. Railroad's pretty flat. BNSF, pretty flat year over year, and pretty big reduction in consumer-related freight loading. Who needs an analyst? You've already done all the work. Well, did the highlights.

I got my little, you know, tape bookmarks. Yeah, that's good. It works. Okay, we have a lot more to get to this morning. We want to give you a quick look at today's schedule, though. Mike and I are going to be here with you until 10.15 a.

m. Eastern time. That is when Buffett Munger and the vice chairman, Greg Abel and Ejeet Jain are going to be taking the stage. You get to watch all of this, the annual meeting. You can see it exclusively here on CNBC and CNBC.com.

2023 Berkshire Hathaway Annual Shareholders Meeting, Berkshire, Warren Buffett, Charlie Munger, Omaha