Buffett/Berkshire - general news

[gfp]

The entire interview with Chris Davis is up on youtube and bloomberg now.  The earlier videos were just short clips it turns out.  

 

https://www.youtube.com/watch?v=VTrE0PgZyvI

 

[Spooky]

On 7/28/2025 at 5:06 PM, gfp said:

So I feel like every other podcast these days is about the huge shortage of electricity we are looking at as these hyperscalers and the government backed arms race pours billions of dollars (trillions?) into data centers.  Additionally, all of these investments in domestic production are in the news every day.  Berkshire and Greg Abel are right at the center of this but the narrative hasn't really caught on with Berkshire yet.  When a big foreign chip firm builds an enormous factory in the United States, it's Berkshire building the factory.  Same with gigafactory in Sparks, NV.  Berkshire even builds their own bridges for BNSF.

 

I wonder how long until Berkshire is touted as the ultimate AI / re-shoring play and Greg Abel as the ideal CEO to navigate the historic investment?

 

Look at all of these projects or break them out by category - Afco/W&W is huge

https://www.wwafcosteel.com/all-projects

 

https://www.wwafcosteel.com/projects/manufacturing

https://www.wwafcosteel.com/projects/industrial

https://www.wwafcosteel.com/projects/aerospace

 

And BRK energy ->

 

 

Thanks for sharing gfp. I am pretty bullish about Berkshire's prospects for the future. The US / world is going to need significantly more energy in the future and Berkshire is well positioned in this regard. Here is a link from the IEA projecting that electricity demand from data centres worldwide is set to more than double by 2030 to around 945 terawatt-hours, slightly more than the entire electricity consumption of Japan today.

 

https://www.iea.org/news/ai-is-set-to-drive-surging-electricity-demand-from-data-centres-while-offering-the-potential-to-transform-how-the-energy-sector-works

[yesman182]

15 hours ago, Xerxes said:

I am hoping to read this work on the Davis family before close of the year or early next year. 

I wouldn't put it off. I read it this year for the first time and was one of the better books I have read in a while. Interesting family history and investment advice. Helped me size up FFH. 

[Xerxes]

3 hours ago, yesman182 said:

I wouldn't put it off. I read it this year for the first time and was one of the better books I have read in a while. Interesting family history and investment advice. Helped me size up FFH. 

cheers !

[mengan]

Earnings are out. Quick comments on my end on the financial statements:

 

1) 5% lower A-shares (measured July 21) compared to last Q, with equivalent increase in B-Shares due to conversion. No reduction in total share count.

 

2) They finally wrote down Kraft Heinz resulting in a 4.745B paper loss on equity accounted earnings. The same will likely need to be done with OXY which sits at a carrying value 5.5B above fair value. So expect additional equity accounted losses in the near future (unless OXY shares rebound).

 

3) Equity to common shareholders stands at 670.28B, up 2.8% YTD. There was a jump compared to last quarter as 14.4B of Payable for Purchase of UST ran off from the liability side of the balance sheet.

 

4) Operating Results (EBIT) before investment gains (losses) improved from 12.7B in Q1 to 14.4B in Q2. Maybe it will exceed last year's (2024) 60.9B record annualized.

 

5) Cash from Operating Activities 10.1B vs 10.9B in Q1. A large increase in the line item "Other" due to asset impairment of Kraft Heinz. Otherwise, no surprises.

 

6) Net sale of equity securities of 3B this quarter. No big elephant purchases or sales.

 

7) They raised 51B in cash from sale/redemption of fixed maturity instruments.

 

8 ) From financing activities, de-levered by 500M and purchased 500M in non-controlling interest somewhere. 

 

 

Edited August 2, 2025 by mengan

[gfp]

16 minutes ago, mengan said:

They raised 51B in cash from sale/redemption of fixed maturity instruments.

 

 

Not really.

 

It's almost entirely t-bills.  They call it "cash" when the t-bills are 3 months or less when purchased.  They call it "short term investments in t-bils" when it's longer than 3 months.

 

There was a distortion available in the t-bill market during the quarter where t-bills that had a maturity right around the estimated debt ceiling x-date traded with above market yields.  Some funds and other market participants avoid maturities that could fall right on a messy date.  Berkshire isn't afraid of such things and probably purchased those bills and got a few extra basis points of income.  The anomaly subsided as soon as the debt ceiling increase was passed.

 

Here is a graphic representation of what I am talking about from CNBC's crude "2 month t-bill" yield index:

 

 

You can see how it caused a corresponding distortion (rates unusually low) in the maturities that didn't fall during the estimated x-date range.  Here is the same chart as above but for the 30 day t-bill:

 

Edited August 2, 2025 by gfp

[mengan]

Sorry, yes by cash, I meant Cash + U.S. Treasury Bills with maturities of three months or less. 

[John Hjorth]

6 minutes ago, mengan said:

Sorry, yes by cash, I meant Cash + U.S. Treasury Bills with maturities of three months or less. 

 

Anyway, a nice first post from you here, @mengan,

 

Welcome to CofB&F! 

 

- - - o 0 o  - - -

 

Insurance float at USD 174 B at EOP 2025H1, at USD 173 B at EOP 2025Q1, so still growing a bit.

 

- - - o 0 o - - -

 

Berkshire continues to evolve gradually into looking like a huge pile of T-bills with a conglomerate on top as a letterpress.

[73 Reds]

22 minutes ago, John Hjorth said:

 

Anyway, a nice first post from you here, @mengan,

 

Welcome to CofB&F! 

 

- - - o 0 o  - - -

 

Insurance float at USD 174 B at EOP 2025H1, at USD 173 B at EOP 2025Q1, so still growing a bit.

 

- - - o 0 o - - -

 

Berkshire continues to evolve gradually into looking like a huge pile of T-bills with a conglomerate on top as a letterpress.

How many years ago was it when Buffett proclaimed that insurance float would begin to decline?  Nothing is predictable except for the strength of Berkshire's balance sheet.  Seems as if Buffett's priority this year is to leave Greg with a company completely beyond destruction and one with endless possibilities.  

Edited August 2, 2025 by 73 Reds
word

[John Hjorth]

21 minutes ago, 73 Reds said:

How many years ago was it when Buffett proclaimed that insurance float would begin to decline?  Nothing is predictable except for the strength of Berkshire's balance sheet.  Seems as if Buffett's priority this year is to leave Greg with a company completely beyond destruction and one with endless possibilities.  

 

@73 Reds,

 

It's in the 2013 Shareholder Letter, p. 7 :

 

Quote

... Further gains in float will be tough to achieve. On the plus side, GEICO’s float will almost certainly grow. In National Indemnity’s reinsurance division, however, we have a number of run-off contracts whose float drifts downward. If we do experience a decline in float at some future time, it will be very gradual– at the outside no more than 3% in any year. The nature of our insurance contracts is such that we can never be subject to immediate demands for sums that are large compared to our cash resources. (In this respect, property-casualty insurance differs in an important way from certain forms of life insurance.) ...

 

That year float was USD 77 B. [I wonder if this should have been posted in the jokes topic.]

Edited August 2, 2025 by John Hjorth

[John Hjorth]

Chris Bloomstrans take upon review of Berkshires 2025Q2 10-Q - a quite uneventful quarter - to me personally always worth a read, a short thread on X :

 

 

 

If not particularly interested, his indignation over lack of credit from some reporter he helped walk through the 10-Q is a bit amusing to me personally and may perhaps stimulate your interest!  - Perhaps I should suggest Jeff [ @DooDiligence ] to provide Chris Bloomstran with his hurt feelings report shared here on CofB&F earlier!  - Perhaps it is about specifically asking for it [credit] as a condition for being available next time, in this game of selfpromotion, or simply to say 'no' next time.

[yesman182]

21 hours ago, mengan said:

Earnings are out. Quick comments on my end on the financial statements:

 

1) 5% lower A-shares (measured July 21) compared to last Q, with equivalent increase in B-Shares due to conversion. No reduction in total share count.

 

2) They finally wrote down Kraft Heinz resulting in a 4.745B paper loss on equity accounted earnings. The same will likely need to be done with OXY which sits at a carrying value 5.5B above fair value. So expect additional equity accounted losses in the near future (unless OXY shares rebound).

 

3) Equity to common shareholders stands at 670.28B, up 2.8% YTD. There was a jump compared to last quarter as 14.4B of Payable for Purchase of UST ran off from the liability side of the balance sheet.

 

4) Operating Results (EBIT) before investment gains (losses) improved from 12.7B in Q1 to 14.4B in Q2. Maybe it will exceed last year's (2024) 60.9B record annualized.

 

5) Cash from Operating Activities 10.1B vs 10.9B in Q1. A large increase in the line item "Other" due to asset impairment of Kraft Heinz. Otherwise, no surprises.

 

6) Net sale of equity securities of 3B this quarter. No big elephant purchases or sales.

 

7) They raised 51B in cash from sale/redemption of fixed maturity instruments.

 

8 ) From financing activities, de-levered by 500M and purchased 500M in non-controlling interest somewhere. 

 

 

Why do you think they will write down OXY? I doubt buffet thinks that business is permanently impaired the way he thinks Kraft is. Yes the price is down, but the price will shoot back up the next time oil hits $100. 

[mengan]

7 minutes ago, yesman182 said:

Why do you think they will write down OXY? I doubt buffet thinks that business is permanently impaired the way he thinks Kraft is. Yes the price is down, but the price will shoot back up the next time oil hits $100. 

It all depends on time horizon. The longer the disconnect remain between the carrying value and fair value, the more you have to justify this disconnect on an accounting basis. 

 

It also doesn't prevent BRK (Not Buffett) from writing OXY down initially, and then as the share price recover, write it up again over time. Ultimately it's all accounting profits/losses, i.e. non-cash. So I would worry too much about it.

[mengan]

Quick comments on my end on the state of the various business units:

 

Insurance

1. GEICO Q/Q premium written growth has temporarily stopped growing, $11B in Q2 vs $11.5B in Q1. Expenses associated with both losses and underwriting expenses including marketing has increased slightly relative premium written. It still has a combined ratio of 83.5% which is really good.

2. BH Primary is improving Q/Q from 103.1% combined ratio in Q1 2025 to 98.7% combined ratio in Q2 2025 as the issues with GUARD and the California wildfires is starting to run off.

3. Berkshire Hathaway Reinsurance Group, Premium written for P/C dropped 18% in Q2 compared with Q1. A big drop. Profitability increased however as the claims from California wildfires run off. Other reinsurance units related to health, variability etc.. remains steady.

BNSF

1. Railroad is steady Q/Q on the top line with lower cost on fuel leading to lower operating expenses and better earnings.

2. Income tax rate is at 19% this quarter which is below 24% recent historically. So the results this quarter is unusually good.

3. There is also some litigation costs that are starting to run off which will result in sustainably higher margins. But the effect will be minimal compared to the size of BRK.

BHE

1. Top line, energy operating revenue decreased by 7% Q/Q as Natural gas pipelines took a big hit. This was offset by increase in revenue from Real estate (+47%). It is safe to say that the real estate business bottom was reached recently.

2. Net earnings of natural gas pipelines declined due to higher interest expense, largely due to debt issued in January 2025 and debt refinancings in the fourth quarter of 2024 at higher interest rates, decreased margin on gas sales and lower other income, partially offset by higher transportation and storage revenues.

3. Net earnings of real estate brokerage increased due to the run off of charges in 2024 with respect to the ongoing real estate industry litigation matters.

4. There is great amount of uncertainty surrounding the One Big Beautiful Bill Act (the “OBBBA”) as half the profit from BHE comes from federal tax credits, BHE pays negative tax due to its CAPEX investment in clean energy including wind. Among its provisions, the OBBBA accelerates the phase-out of clean electricity production and investment tax credits and establishes new sourcing requirements.

Manufacturing, Service and Retailing

1. Manufacturing, Service and Retailing improved top line Q/Q sequentially with +3.6% and bottom line sequentially Q/Q with 17.7%. There is obviously operating leverage built in to the business here which is a good sign.

2. Revenue increased on Industrial and Building products but decreased on Consumer products. The latter shows that the US consumer sentiment is likely still quite low.

3. Within Industrial products, PCC and Lubrizol are holding steady with Marmon increasing revenue as many of its units experience double digit growth.

4. Building products group are still grappling with slowing customer demand and pricing pressures, attributable to prevailing general economic conditions and housing markets.

5. Consumer products group year-to-date revenues declined at Fruit of the Loom (11.7%), Garan (10.1%) and Jazwares (38.5%). I.e. Weak Consumer.

6. Brooks Sports is doing well with 18.4% increase in revenue in the second quarter and 16.8% in the first six months of 2025 compared to 2024, primarily due to increased unit sales and changes in business mix.

7. Service and retailing are doing well with a Q/Q top line growth of 2% and a bottom line growth Q/Q of 8.5% mainly attributed to aviation and IPS.

8. McLane’s revenues declined $300 million (2.4%) in the first quarter of 2025 compared to 2024, primarily due to lower volumes attributable to changing overall economic conditions and consumer preferences on dining at restaurants.

9. Pilot’s revenues in the first quarter of 2025 declined $2.1 billion (16.6%) compared to the same period in 2024. The decline was primarily attributable to lower average fuel prices per gallon, partially offset by higher fuel volumes.

Edited August 3, 2025 by mengan

[73 Reds]

53 minutes ago, mengan said:

Quick comments on my end on the state of the various business units:

 

Insurance

1. GEICO Q/Q premium written growth has temporarily stopped growing, $11B in Q2 vs $11.5B in Q1. Expenses associated with both losses and underwriting expenses including marketing has increased slightly relative premium written. It still has a combined ratio of 83.5% which is really good.

2. BH Primary is improving Q/Q from 103.1% combined ratio in Q1 2025 to 98.7% combined ratio in Q2 2025 as the issues with GUARD and the California wildfires is starting to run off.

3. Berkshire Hathaway Reinsurance Group, Premium written for P/C dropped 18% in Q2 compared with Q1. A big drop. Profitability increased however as the claims from California wildfires run off. Other reinsurance units related to health, variability etc.. remains steady.

BNSF

1. Railroad is steady Q/Q on the top line with lower cost on fuel leading to lower operating expenses and better earnings.

2. Income tax rate is at 19% this quarter which is below 24% recent historically. So the results this quarter is unusually good.

3. There is also some litigation costs that are starting to run off which will result in sustainably higher margins. But the effect will be minimal compared to the size of BRK.

BHE

1. Top line, energy operating revenue decreased by 7% Q/Q as Natural gas pipelines took a big hit. This was offset by increase in revenue from Real estate (+47%). It is safe to say that the real estate business bottom was reached recently.

2. Net earnings of natural gas pipelines declined due to higher interest expense, largely due to debt issued in January 2025 and debt refinancings in the fourth quarter of 2024 at higher interest rates, decreased margin on gas sales and lower other income, partially offset by higher transportation and storage revenues.

3. Net earnings of real estate brokerage increased due to the run off of charges in 2024 with respect to the ongoing real estate industry litigation matters.

4. There is great amount of uncertainty surrounding the One Big Beautiful Bill Act (the “OBBBA”) as half the profit from BHE comes from federal tax credits, BHE pays negative tax due to its CAPEX investment in clean energy including wind. Among its provisions, the OBBBA accelerates the phase-out of clean electricity production and investment tax credits and establishes new sourcing requirements.

Manufacturing, Service and Retailing

1. Manufacturing, Service and Retailing improved top line Q/Q sequentially with +3.6% and bottom line sequentially Q/Q with 17.7%. There is obviously operating leverage built in to the business here which is a good sign.

2. Revenue increased on Industrial and Building products but decreased on Consumer products. The latter shows that the US consumer sentiment is likely still quite low.

3. Within Industrial products, PCC and Lubrizol are holding steady with Marmon increasing revenue as many of its units experience double digit growth.

4. Building products group are still grappling with slowing customer demand and pricing pressures, attributable to prevailing general economic conditions and housing markets.

5. Consumer products group year-to-date revenues declined at Fruit of the Loom (11.7%), Garan (10.1%) and Jazwares (38.5%). I.e. Weak Consumer.

6. Brooks Sports is doing well with 18.4% increase in revenue in the second quarter and 16.8% in the first six months of 2025 compared to 2024, primarily due to increased unit sales and changes in business mix.

7. Service and retailing are doing well with a Q/Q top line growth of 2% and a bottom line growth Q/Q of 8.5% mainly attributed to aviation and IPS.

8. McLane’s revenues declined $300 million (2.4%) in the first quarter of 2025 compared to 2024, primarily due to lower volumes attributable to changing overall economic conditions and consumer preferences on dining at restaurants.

9. Pilot’s revenues in the first quarter of 2025 declined $2.1 billion (16.6%) compared to the same period in 2024. The decline was primarily attributable to lower average fuel prices per gallon, partially offset by higher fuel volumes.

Thanks for the great summary.  

[gfp]

51 minutes ago, mengan said:

It all depends on time horizon. The longer the disconnect remain between the carrying value and fair value, the more you have to justify this disconnect on an accounting basis. 

 

It also doesn't prevent BRK (Not Buffett) from writing OXY down initially, and then as the share price recover, write it up again over time. Ultimately it's all accounting profits/losses, i.e. non-cash. So I would worry too much about it.

 

 

I don't think Berkshire would be allowed to "write it up again" once an equity method investment is written down because it was deemed to be 'other than temporarily impaired.'  The equity method investment (OXY in this example) would be written up by Berkshire's share of undistributed profits or the primary way it would be "written up" in the future would be on a sale or merger that resulted in discontinuing the equity method (all stock deal with Chevron, BRK's position could become mark to market for example - less than 20% of CVX).  Sale for cash obviously would become whatever cash showed up.

 

That was one of the reasons short sellers saw red flags at Fairfax - their minority interest deals allowed them to "write up" the value of certain subsidiaries when that is extremely rare in corporate accounting.  Especially since they were selling de-facto fixed income preferred stock and not plain vanilla equity at the claimed valuation.  It wasn't a scam at Fairfax, and it may have been an IFRS quirk that wouldn't fly in the US - but it raised red flags for a reason.  Berkshire can't write up the value of GEICO even though it is held on the books for much less than it is worth today.

 

You have to dig yourself out of the new impaired value with your share of undistributed earnings or a sale if you want to recover the accounting value.

[John Hjorth]

1 hour ago, mengan said:

Quick comments on my end on the state of the various business units:

 

Insurance

1. GEICO Q/Q premium written growth has temporarily stopped growing, $11B in Q2 vs $11.5B in Q1. Expenses associated with both losses and underwriting expenses including marketing has increased slightly relative premium written. It still has a combined ratio of 83.5% which is really good.

2. BH Primary is improving Q/Q from 103.1% combined ratio in Q1 2025 to 98.7% combined ratio in Q2 2025 as the issues with GUARD and the California wildfires is starting to run off.

3. Berkshire Hathaway Reinsurance Group, Premium written for P/C dropped 18% in Q2 compared with Q1. A big drop. Profitability increased however as the claims from California wildfires run off. Other reinsurance units related to health, variability etc.. remains steady.

BNSF

1. Railroad is steady Q/Q on the top line with lower cost on fuel leading to lower operating expenses and better earnings.

2. Income tax rate is at 19% this quarter which is below 24% recent historically. So the results this quarter is unusually good.

3. There is also some litigation costs that are starting to run off which will result in sustainably higher margins. But the effect will be minimal compared to the size of BRK.

BHE

1. Top line, energy operating revenue decreased by 7% Q/Q as Natural gas pipelines took a big hit. This was offset by increase in revenue from Real estate (+47%). It is safe to say that the real estate business bottom was reached recently.

2. Net earnings of natural gas pipelines declined due to higher interest expense, largely due to debt issued in January 2025 and debt refinancings in the fourth quarter of 2024 at higher interest rates, decreased margin on gas sales and lower other income, partially offset by higher transportation and storage revenues.

3. Net earnings of real estate brokerage increased due to the run off of charges in 2024 with respect to the ongoing real estate industry litigation matters.

4. There is great amount of uncertainty surrounding the One Big Beautiful Bill Act (the “OBBBA”) as half the profit from BHE comes from federal tax credits, BHE pays negative tax due to its CAPEX investment in clean energy including wind. Among its provisions, the OBBBA accelerates the phase-out of clean electricity production and investment tax credits and establishes new sourcing requirements.

Manufacturing, Service and Retailing

1. Manufacturing, Service and Retailing improved top line Q/Q sequentially with +3.6% and bottom line sequentially Q/Q with 17.7%. There is obviously operating leverage built in to the business here which is a good sign.

2. Revenue increased on Industrial and Building products but decreased on Consumer products. The latter shows that the US consumer sentiment is likely still quite low.

3. Within Industrial products, PCC and Lubrizol are holding steady with Marmon increasing revenue as many of its units experience double digit growth.

4. Building products group are still grappling with slowing customer demand and pricing pressures, attributable to prevailing general economic conditions and housing markets.

5. Consumer products group year-to-date revenues declined at Fruit of the Loom (11.7%), Garan (10.1%) and Jazwares (38.5%). I.e. Weak Consumer.

6. Brooks Sports is doing well with 18.4% increase in revenue in the second quarter and 16.8% in the first six months of 2025 compared to 2024, primarily due to increased unit sales and changes in business mix.

7. Service and retailing are doing well with a Q/Q top line growth of 2% and a bottom line growth Q/Q of 8.5% mainly attributed to aviation and IPS.

8. McLane’s revenues declined $300 million (2.4%) in the first quarter of 2025 compared to 2024, primarily due to lower volumes attributable to changing overall economic conditions and consumer preferences on dining at restaurants.

9. Pilot’s revenues in the first quarter of 2025 declined $2.1 billion (16.6%) compared to the same period in 2024. The decline was primarily attributable to lower average fuel prices per gallon, partially offset by higher fuel volumes.

 

25 minutes ago, 73 Reds said:

Thanks for the great summary.  

 

@mengan,

 

I personally coulden't agree more with @73 Reds here. Thank you.

[mengan]

15 minutes ago, gfp said:

 

 

I don't think Berkshire would be allowed to "write it up again" once an equity method investment is written down because it was deemed to be 'other than temporarily impaired.'  The equity method investment (OXY in this example) would be written up by Berkshire's share of undistributed profits or the primary way it would be "written up" in the future would be on a sale or merger that resulted in discontinuing the equity method (all stock deal with Chevron, BRK's position could become mark to market for example - less than 20% of CVX).  Sale for cash obviously would become whatever cash showed up.

 

That was one of the reasons short sellers saw red flags at Fairfax - their minority interest deals allowed them to "write up" the value of certain subsidiaries when that is extremely rare in corporate accounting.  Especially since they were selling de-facto fixed income preferred stock and not plain vanilla equity at the claimed valuation.  It wasn't a scam at Fairfax, and it may have been an IFRS quirk that wouldn't fly in the US - but it raised red flags for a reason.  Berkshire can't write up the value of GEICO even though it is held on the books for much less than it is worth today.

 

You have to dig yourself out of the new impaired value with your share of undistributed earnings or a sale if you want to recover the accounting value.

 

You are right again

 

I was thinking in IFRS when I wrote this. Under GAAP, reversal of asset impairment is not possible. Fairfax accounts using IFRS whereas BRK uses GAAP. Hence the different accounting results.

[gfp]

Welcome mengan - I have enjoyed your posts!  I wasn't trying to pick on you or anything.  Just reading and thinking out loud

[Masterofnone]

2 hours ago, mengan said:

Quick comments on my end on the state of the various business units:

 

Insurance

1. GEICO Q/Q premium written growth has temporarily stopped growing, $11B in Q2 vs $11.5B in Q1. Expenses associated with both losses and underwriting expenses including marketing has increased slightly relative premium written. It still has a combined ratio of 83.5% which is really good.

2. BH Primary is improving Q/Q from 103.1% combined ratio in Q1 2025 to 98.7% combined ratio in Q2 2025 as the issues with GUARD and the California wildfires is starting to run off.

3. Berkshire Hathaway Reinsurance Group, Premium written for P/C dropped 18% in Q2 compared with Q1. A big drop. Profitability increased however as the claims from California wildfires run off. Other reinsurance units related to health, variability etc.. remains steady.

BNSF

1. Railroad is steady Q/Q on the top line with lower cost on fuel leading to lower operating expenses and better earnings.

2. Income tax rate is at 19% this quarter which is below 24% recent historically. So the results this quarter is unusually good.

3. There is also some litigation costs that are starting to run off which will result in sustainably higher margins. But the effect will be minimal compared to the size of BRK.

BHE

1. Top line, energy operating revenue decreased by 7% Q/Q as Natural gas pipelines took a big hit. This was offset by increase in revenue from Real estate (+47%). It is safe to say that the real estate business bottom was reached recently.

2. Net earnings of natural gas pipelines declined due to higher interest expense, largely due to debt issued in January 2025 and debt refinancings in the fourth quarter of 2024 at higher interest rates, decreased margin on gas sales and lower other income, partially offset by higher transportation and storage revenues.

3. Net earnings of real estate brokerage increased due to the run off of charges in 2024 with respect to the ongoing real estate industry litigation matters.

4. There is great amount of uncertainty surrounding the One Big Beautiful Bill Act (the “OBBBA”) as half the profit from BHE comes from federal tax credits, BHE pays negative tax due to its CAPEX investment in clean energy including wind. Among its provisions, the OBBBA accelerates the phase-out of clean electricity production and investment tax credits and establishes new sourcing requirements.

Manufacturing, Service and Retailing

1. Manufacturing, Service and Retailing improved top line Q/Q sequentially with +3.6% and bottom line sequentially Q/Q with 17.7%. There is obviously operating leverage built in to the business here which is a good sign.

2. Revenue increased on Industrial and Building products but decreased on Consumer products. The latter shows that the US consumer sentiment is likely still quite low.

3. Within Industrial products, PCC and Lubrizol are holding steady with Marmon increasing revenue as many of its units experience double digit growth.

4. Building products group are still grappling with slowing customer demand and pricing pressures, attributable to prevailing general economic conditions and housing markets.

5. Consumer products group year-to-date revenues declined at Fruit of the Loom (11.7%), Garan (10.1%) and Jazwares (38.5%). I.e. Weak Consumer.

6. Brooks Sports is doing well with 18.4% increase in revenue in the second quarter and 16.8% in the first six months of 2025 compared to 2024, primarily due to increased unit sales and changes in business mix.

7. Service and retailing are doing well with a Q/Q top line growth of 2% and a bottom line growth Q/Q of 8.5% mainly attributed to aviation and IPS.

8. McLane’s revenues declined $300 million (2.4%) in the first quarter of 2025 compared to 2024, primarily due to lower volumes attributable to changing overall economic conditions and consumer preferences on dining at restaurants.

9. Pilot’s revenues in the first quarter of 2025 declined $2.1 billion (16.6%) compared to the same period in 2024. The decline was primarily attributable to lower average fuel prices per gallon, partially offset by higher fuel volumes.

Another thanks. Perfect level of detail in your outstanding summary.

[John Hjorth]

1 hour ago, gfp said:

... That was one of the reasons short sellers saw red flags at Fairfax - their minority interest deals allowed them to "write up" the value of certain subsidiaries when that is extremely rare in corporate accounting.  Especially since they were selling de-facto fixed income preferred stock and not plain vanilla equity at the claimed valuation.  It wasn't a scam at Fairfax, and it may have been an IFRS quirk that wouldn't fly in the US - but it raised red flags for a reason. ...

 

Awesome post, @gfp!,

 

Still, generally, but certainly in a way Berkshire off topic : It's about not to rely on the kindness of strangers. If that is not the case, next and second best alternative is to have friends trusting you with pockets deeper than your own.

 

What was going on at Fairfax at that time is 'before me' - I haven't experienced and met this excellent explanation before.

[Viking]

2 hours ago, gfp said:

I don't think Berkshire would be allowed to "write it up again" once an equity method investment is written down because it was deemed to be 'other than temporarily impaired.'  The equity method investment (OXY in this example) would be written up by Berkshire's share of undistributed profits or the primary way it would be "written up" in the future would be on a sale or merger that resulted in discontinuing the equity method (all stock deal with Chevron, BRK's position could become mark to market for example - less than 20% of CVX).  Sale for cash obviously would become whatever cash showed up.

 

That was one of the reasons short sellers saw red flags at Fairfax - their minority interest deals allowed them to "write up" the value of certain subsidiaries when that is extremely rare in corporate accounting.  Especially since they were selling de-facto fixed income preferred stock and not plain vanilla equity at the claimed valuation.  It wasn't a scam at Fairfax, and it may have been an IFRS quirk that wouldn't fly in the US - but it raised red flags for a reason.  Berkshire can't write up the value of GEICO even though it is held on the books for much less than it is worth today.

 

You have to dig yourself out of the new impaired value with your share of undistributed earnings or a sale if you want to recover the accounting value.

@gfp and @mengan, I appreciate you both getting into the weeds regarding the accounting, and the differences in GAAP and IFRS. Very helpful for us non-accountant types. 

 

[charlieruane]

Welcome @mengan, keep posting!

[Thrifty3000]

Bloomstran provided an explanation on X for why media is under-reporting BRK’s “real” earnings. Lack of understanding of forex impact/accounting…

 

 

[scorpioncapital]

it is possible currency movements should be treated similar to the investment gain/loss in every quarter. Somewhat similar if you consider the USBUCK as an actual investment. Cash is an asset class In a way. And foreign cash is also an investment.