Berkshire Hathaway 2025 First Quarter Report

[John Hjorth]

Now available here.

[John Hjorth]

The 'traditional' 60/40 portfolio is at Berskshire now a 40/60 portfolio. 

 

Net sales of stocks in the quarter of USD 1.494 B, consisting of sales at USD 4.677 B and purchases of USD 3.183 B.

[Charlie]

Barrons short take on earnings:

 

https://www.barrons.com/livecoverage/berkshire-hathaway-earnings-warren-buffett-annual-meeting/card/berkshire-hathaway-operating-profits-fell-14-in-first-quarter-cash-hit-a-record-348-billion--DWPzSBdSAfspkxLJ1UzG?mod=Searchresults

 

 

Cheers!

[gfp]

13 minutes ago, Charlie said:

Barrons short take on earnings:

 

https://www.barrons.com/livecoverage/berkshire-hathaway-earnings-warren-buffett-annual-meeting/card/berkshire-hathaway-operating-profits-fell-14-in-first-quarter-cash-hit-a-record-348-billion--DWPzSBdSAfspkxLJ1UzG?mod=Searchresults

 

 

Cheers!

 

Barrons misses the payable for T-bills and overstates the cash balance, as usual.  I'm sure most journalists will parrot this incorrect cash balance since they are obsessed with Berkshire's cash position.

[John Hjorth]

12 minutes ago, gfp said:

Barrons misses the payable for T-bills and overstates the cash balance, as usual.  I'm sure most journalists will parrot this incorrect cash balance since they are obsessed with Berkshire's cash position.

 

Yeah, @gfp,

 

We're at at state and point in time, where committing to this error is becoming ridiculous in professional journalism. The number of times it has happened is by now almost countless.

 

[Well, it 'just' a USD 14.38 B balance sheet error. - Around the cost of four Danish Great Belt bridges! ]

 

- - - o 0 o - - -

 

Insurance float EOP2025Q1 at USD 173 B, still growing, albeit slowly.

Edited May 3, 2025 by John Hjorth

[Xerxes]

Did he forget comment on the operating Q1 results  

[Blake Hampton]

 

Highest ever amount of cash relative to tangible assets. However, it's still only 33%.

[gfp]

C'mon Blake, use $333.3 Billion for cash.  Don't be a dupe

[Blake Hampton]

If you deduct Berkshire's deferred taxes from total liabilities, their cash plus receivables are enough to cover all their debt.

[John Hjorth]

18 minutes ago, Xerxes said:

Did he forget comment on the operating Q1 results  

 

@Xerxes,

 

There are a lot of comments in the 10-Q MD&A.

 

Insurance and reinsurance weak, except GEICO performing satisfactorily. The descriptions of all the ongoing wildfire litigation related to BHE and insurance makes my mouth look like the a** on a chicken [constricted and wrinkled, with no teeth].

 

- - - o 0 o - - -

 

If you're referring to the Shareholder meeting in progress, then yes.

Edited May 3, 2025 by John Hjorth

[Xerxes]

12 hours ago, John Hjorth said:

 

@Xerxes,

 

There are a lot of comments in the 10-Q MD&A.

 

Insurance and reinsurance weak, except GEICO performing satisfactorily. The descriptions of all the ongoing wildfire litigation related to BHE and insurance makes my mouth look like the a** on a chicken [constricted and wrinkled, with no teeth].

 

- - - o 0 o - - -

 

If you're referring to the Shareholder meeting in progress, then yes.

thank you. 
 

looks like he got to it eventually 

[Parsad]

18 hours ago, Blake Hampton said:

 

Highest ever amount of cash relative to tangible assets. However, it's still only 33%.

 

Hi Blake, I think you need to redo the spreadsheet and include non-insurance operating business assets.  These assets have grown tremendously as a portion total tangible assets.  So the cash versus tangible assets isn't showing the fourth leg of income that Berkshire generates (cash, bonds, equities, operating businesses).  No doubt that cash is high relative to historical amounts, but exactly how high is it in terms of income generation by Berkshire?  Cheers!

[gfp]

4 hours ago, Parsad said:

 

Hi Blake, I think you need to redo the spreadsheet and include non-insurance operating business assets.  These assets have grown tremendously as a portion total tangible assets.  So the cash versus tangible assets isn't showing the fourth leg of income that Berkshire generates (cash, bonds, equities, operating businesses).  No doubt that cash is high relative to historical amounts, but exactly how high is it in terms of income generation by Berkshire?  Cheers!

And he should read a balance sheet and use the correct cash balance 

[Blake Hampton]

On 5/4/2025 at 3:02 AM, Parsad said:

Hi Blake, I think you need to redo the spreadsheet and include non-insurance operating business assets.  These assets have grown tremendously as a portion total tangible assets.  So the cash versus tangible assets isn't showing the fourth leg of income that Berkshire generates (cash, bonds, equities, operating businesses).  No doubt that cash is high relative to historical amounts, but exactly how high is it in terms of income generation by Berkshire?  Cheers!

 

I'm a bit confused — I thought my interpretation was correct, since I assumed those operating business assets are included in the remainder of the tangible assets, outside of the specifically listed equity securities.

 

Would you mind sharing your own breakdown of how you see things as of the most recent year-end, maybe as an example?

 

Edited May 5, 2025 by Blake Hampton

[Blake Hampton]

 

23 hours ago, gfp said:

And he should read a balance sheet and use the correct cash balance 

 

What are you even going on about:
 

[gfp]

2 minutes ago, Blake Hampton said:

 

 

What are you even going on about:
 

 

Keep going to Liabilities champ

[Blake Hampton]

6 minutes ago, gfp said:

Keep going to Liabilities champ

 

Champ

[John Hjorth]

6 minutes ago, gfp said:

Keep going to Liabilities champ

 

Blake [ @Blake Hampton ],

 

You have to deduct from total cash the ultra-short term liability called 'Payable for purchases of U.S. Treasury Bills', at USD 14.380 B as per EOP2025Q1. Always remember to check if there is such a thingy at the end of a given quarter while calculating Berkshire cash.[ ]

[gfp]

Energy 10Q ->

https://www.sec.gov/ix?doc=/Archives/edgar/data/0001081316/000108131625000010/bhe-20250331.htm

 

and

 

Railroad 10Q ->

https://www.sec.gov/ix?doc=/Archives/edgar/data/934612/000093461225000007/bni-20250331.htm

[Parsad]

12 hours ago, Blake Hampton said:

 

I'm a bit confused — I thought my interpretation was correct, since I assumed those operating business assets are included in the remainder of the tangible assets, outside of the specifically listed equity securities.

 

Would you mind sharing your own breakdown of how you see things as of the most recent year-end, maybe as an example?

 

 

Earlier in Berkshire's existence, there weren't as many operating companies and it was mostly insurance.  So that insurance float was invested mostly in equities, bonds and cash.  But over the years, operating businesses (essentially another category) make up a larger and larger percentage of total assets.  

 

So if you really want to know what Buffett thinks of market valuation or potential inflation, you need to decrease the percentage of tangible assets by non-insurance operating business assets.  That will give you a more accurate relationship between cash, bonds and how he sees market valuation/opportunities (equities).  

 

For example, in 1998 and 1999, markets especially tech stocks were extremely overvalued.  Yet he didn't have a lot of cash because he was buying up private companies and undervalued stocks.  Those two years were two of the most prolific periods of Berkshire acquiring non-insurance businesses.  You would imagine Berkshire had lots and lots of cash in 1999...but he didn't.  Cheers!

[RiskAdjReturn]

I think, even after sellofff from Friday before earnings, BRK is going to be a suboptimal stock for investors for awhile, or until it properly corrects more in line with economic reality (weighing machine) of what really here. Of course this relates to a quite irrational almost 1.7x P/B on 3/31 values.

 

I believe many in the media and within certainly retail investing world get a little too caught up in the nostalgia/story and "so much cash" headlines but lose sight of whats really on the scales here in (1) an overcapitalized company and (2) in a case where book actually really does come close to market value of assets. Critics will jump in and say there is a lot of hidden value that book understates, but I will submit that the numbers don't bear that out, earnings power wise. If book is understated, then the numbers I will show will actually paint an even bleaker picture of ROE BRK does (since ROE should be noticeably higher if a big story of understated gaap assets).

 

Here is a clean and quick way to think about BRK in its consolidated totality. Let's avoid getting wrapped around axle with insurance, etc and just looks at the consol picture here.

 

Take the traded equites bucket (non-equity method names) off the balance sheet. The assign the entire DTL (deferred tax liability) for some quick and dirty slicing which makes sense ultimately. There is roughly $177B of "net nav" for the public traded equities book net of DTL.

 

Then lets deduct the $177B of nav from the consolidated nav, in order to isolate the "remainco" book equity for remaining business (which of course includes cash and treasuries, businesses, and equity method names, net of all other liabs). That gives us $479N of nav/book for the business excluding traded portfolio. Note: $177+ 479 = 3/31 GAAP Berk book value net of minority interest, or $656

 

Paying 1.7x for each bucket of course, we are just breaking things a part a bit to not get bogged down with the noise and headlines and narrative.

 

The operating businesses (and treasuries) did about $11M pre tax. maybe thats light, maybe not. No real way of knowing whether we can run rate for an annual proxy. But if you tax the $11, let's call it $9B after-tax. That's a $36B AT earning figure against $479B of capital employed. Let's not get fixated on "float" and under-valued asset assets, etc. Let's just focus on the basic math. That's a $7.5% ROE on the non-traded book. And its worth noting, I'm being very generous and housing all the dividends in the public traded book in the operating line (where Berk puts it, along with interest income). So this earnings stream is enjoying divs from Coke, BAC, etc which aren't even in the $479B capital bucket.

 

so, simply using 1q as proxy, you are run rating 7.5% ROE. or, your book value (on this portion--the 479) is going to grow 7.5% / yr retained. The public book, net of DTL, will do whatever those stocks do...but you are paying 1.70x for those stocks...eyes wide open.

 

One might say, "well he is going to deploy all the cash into more productive uses!"...really? how easy is it to say we can give up 5% coupons (embedded in the operating earnings number) and repurpose that into higher returning, risk-adjusted streams? not easy.

 

Anyway, paying 1.7x for an equity book, and 1.7x for the "other stuff---which is most of berkshire"----which looks to be doing 7.5% AT ROE....thats just alot to overcome. In fact, I'm suprised Warren has always featured performance of Berk using share price instead of book. book is really his scorecard, the stock (such as now) goes all over the place over time but now is certainly at a point where its disconnected from prudent fundamental math.

 

I realized much of the Berkshire shareholder base owns at such a low basis that there is never a good case to sell. So really this is directed to marginal buyers/sellers or those that own in tax-advantaged vehicles.

 

I welcome any critique here, but really only those that can make a case for the fundamentals being better than my case claims. The "option value of cash" arguments and stuff arent fundamental. thats sorta silly honestly as investors can create cash optionality for themselves at 1x book.

 

This is only going to be more challenged over time, unless stock trades back to level ( I think any premium to book is honestly, at this size, stretched).

 

Good luck to all. Love the company, love the leader, love the history. this is just the inside baseball side of things and I wouldnt want to be Greg.

 

Best thing they could have done is guide investors that paying over book is not advised. Now they can't really do dividends or buybacks as they are both dilutive.

[DooDiligence]

54 minutes ago, RiskAdjReturn said:

I think, even after sellofff from Friday before earnings, BRK is going to be a suboptimal stock for investors for awhile, or until it properly corrects more in line with economic reality (weighing machine) of what really here. Of course this relates to a quite irrational almost 1.7x P/B on 3/31 values.

 

I believe many in the media and within certainly retail investing world get a little too caught up in the nostalgia/story and "so much cash" headlines but lose sight of whats really on the scales here in (1) an overcapitalized company and (2) in a case where book actually really does come close to market value of assets. Critics will jump in and say there is a lot of hidden value that book understates, but I will submit that the numbers don't bear that out, earnings power wise. If book is understated, then the numbers I will show will actually paint an even bleaker picture of ROE BRK does (since ROE should be noticeably higher if a big story of understated gaap assets).

 

Here is a clean and quick way to think about BRK in its consolidated totality. Let's avoid getting wrapped around axle with insurance, etc and just looks at the consol picture here.

 

Take the traded equites bucket (non-equity method names) off the balance sheet. The assign the entire DTL (deferred tax liability) for some quick and dirty slicing which makes sense ultimately. There is roughly $177B of "net nav" for the public traded equities book net of DTL.

 

Then lets deduct the $177B of nav from the consolidated nav, in order to isolate the "remainco" book equity for remaining business (which of course includes cash and treasuries, businesses, and equity method names, net of all other liabs). That gives us $479N of nav/book for the business excluding traded portfolio. Note: $177+ 479 = 3/31 GAAP Berk book value net of minority interest, or $656

 

Paying 1.7x for each bucket of course, we are just breaking things a part a bit to not get bogged down with the noise and headlines and narrative.

 

The operating businesses (and treasuries) did about $11M pre tax. maybe thats light, maybe not. No real way of knowing whether we can run rate for an annual proxy. But if you tax the $11, let's call it $9B after-tax. That's a $36B AT earning figure against $479B of capital employed. Let's not get fixated on "float" and under-valued asset assets, etc. Let's just focus on the basic math. That's a $7.5% ROE on the non-traded book. And its worth noting, I'm being very generous and housing all the dividends in the public traded book in the operating line (where Berk puts it, along with interest income). So this earnings stream is enjoying divs from Coke, BAC, etc which aren't even in the $479B capital bucket.

 

so, simply using 1q as proxy, you are run rating 7.5% ROE. or, your book value (on this portion--the 479) is going to grow 7.5% / yr retained. The public book, net of DTL, will do whatever those stocks do...but you are paying 1.70x for those stocks...eyes wide open.

 

One might say, "well he is going to deploy all the cash into more productive uses!"...really? how easy is it to say we can give up 5% coupons (embedded in the operating earnings number) and repurpose that into higher returning, risk-adjusted streams? not easy.

 

Anyway, paying 1.7x for an equity book, and 1.7x for the "other stuff---which is most of berkshire"----which looks to be doing 7.5% AT ROE....thats just alot to overcome. In fact, I'm suprised Warren has always featured performance of Berk using share price instead of book. book is really his scorecard, the stock (such as now) goes all over the place over time but now is certainly at a point where its disconnected from prudent fundamental math.

 

I realized much of the Berkshire shareholder base owns at such a low basis that there is never a good case to sell. So really this is directed to marginal buyers/sellers or those that own in tax-advantaged vehicles.

 

I welcome any critique here, but really only those that can make a case for the fundamentals being better than my case claims. The "option value of cash" arguments and stuff arent fundamental. thats sorta silly honestly as investors can create cash optionality for themselves at 1x book.

 

This is only going to be more challenged over time, unless stock trades back to level ( I think any premium to book is honestly, at this size, stretched).

 

Good luck to all. Love the company, love the leader, love the history. this is just the inside baseball side of things and I wouldnt want to be Greg.

 

Best thing they could have done is guide investors that paying over book is not advised. Now they can't really do dividends or buybacks as they are both dilutive.

 

Thank you for making me feel significantly less remorse for selling all my non-taxable shares recently.

[John Hjorth]

1 hour ago, RiskAdjReturn said:

... Best thing they could have done is guide investors that paying over book is not advised. Now they can't really do dividends or buybacks as they are both dilutive.

 

@RiskAdjReturn,

 

You've got to be kidding me. I'm living on the planet called The Earth, where are you from?

[sleepydragon]

3 hours ago, RiskAdjReturn said:

(1) an overcapitalized company and

 

so that's a bad thing?