Berkshire Hathaway Annual Meeting 2026

[gfp]

In case anybody is interested in this Opus 4.7 summary I had it prepare from the 10Q, I will copy and paste it below.  It made some errors but minor.

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Berkshire Hathaway 1Q 2026 10-Q — Deep Read

1. Repurchases (Q1 2026 and subsequent)

Q1 2026 repurchases (Item 2, Part II):

• Class A: 33 shares at avg $729,701.17 — all in March
• Class B: 431,462 shares at avg $486.92 — all in March
• Total: ~$235 million, or roughly 321 A-equivalent shares

That's a token amount on a $1 trillion+ company — but the signal is what's notable. The last reported buyback before this was Q1 2024. Berkshire bought back zero stock for all of 2025. The fact that Greg Abel (now CEO as of 1/1/26) flipped the switch back on in March, even at a tiny scale, is the story. The $729,701 average A price puts the buyback meaningfully below quarter-end book value. [AI MADE AN ERROR HERE]

Subsequent to quarter-end: Comparing the 3/31/26 share counts (Note 18) against the 4/14/26 cover-page counts:

• Class A went from 505,951 → 505,697 (down 254)
• Class B went from 1,397,927,677 → 1,398,308,677 (up 381,000)
• 254 × 1,500 = 381,000 — i.e., the Class A drop is fully explained by A→B conversions

No additional repurchases occurred between 3/31/26 and 4/14/26. The Q1 buyback was a one-shot in March. (CNBC headlines suggest Abel personally bought stock too, but the 10-Q only covers company repurchases.)

2. Book Value Per Share & P/B Ratio

Item	Value
Berkshire shareholders' equity (excl. NCI of $2,269M)	$727,181 million
Equivalent Class A shares outstanding 3/31/26	1,437,903
Book value per Class A share	$505,723
Book value per Class B share	$337.15
BRK.A price (close, 5/1/26)	$710,300
P/B ratio (Class A)	1.405x
BRK.B price (close, 5/1/26)	$473.01
P/B ratio (Class B)	1.403x

A P/B around 1.40x is below the post-2022 trading range and is the kind of multiple where Buffett historically said he'd be "aggressive" on buybacks. In this context, the resumption of buybacks at an average BRK.A price of $729,701 (~1.44x book at the 12/31/25 BV per share of ~$498,839) makes sense.

3. Under-the-Radar Disclosures Worth Highlighting

a) The Tokio Marine deal — buried in BHRG section. On 3/23/26, NICO entered a whole-account quota-share reinsurance agreement with Tokio Marine Holdings subsidiaries assuming "a portion of the net non-life premiums written and related losses and expenses…on risks attaching over a ten-year term commencing April 1, 2026." Berkshire says it "is expected to generate meaningful premium volumes over its term." This is a major new long-duration reinsurance relationship — barely flagged in one paragraph.

b) PacifiCorp wildfire reversal. On April 8, 2026 (after quarter-end), the Oregon Court of Appeals reversed and remanded the entire James Phase I liability verdict, finding the trial court's "evidence applies to all class members" jury instruction was prejudicial error. The appeals court also explicitly said the trial court can reconsider class certification. Phase II trials were stayed April 9 and the parties were ordered to mandatory mediation. The $719M in posted bonds "could eventually be discharged." Cumulative wildfire accrual remains $2.9B with $577M unpaid at 3/31; PacifiCorp paid $584M in Q1 settlements alone.

c) PacifiCorp selling off Washington operations. On 2/15/26, PacifiCorp signed an Asset Purchase and Service Area Transfer Agreement to sell its Washington operations to Portland General Electric for $1.9 billion in cash, expected to close 1H 2027. Continued shrinkage of PacifiCorp's wildfire-exposed footprint.

d) Massive Treasury bill settlement timing oddity. Unsettled T-bill purchases were $17.2 billion at 3/31/26 vs. $167 million at 12/31/25. This goes through both the asset side (in the $339B short-term Treasuries figure) and as a payable on the liability side. It means quarter-end "cash + Treasuries" optics are inflated by ~$17B that effectively cleared days later. On a settled basis, the cash + T-bill pile is ~$373.5B (per MD&A), not the $390B+ implied by the gross figures.

e) Tax rate normalized hard. Effective tax rate jumped to 17.4% from 9.2% a year ago. The 9.2% in Q1 25 was distorted by the big investment loss; the 17.4% is closer to a normal run-rate now that pre-tax earnings include a $325M pre-tax FX gain (vs. a $936M FX loss in 1Q25), which together with much smaller equity mark-to-market losses made the denominator bigger.

f) Equity portfolio rotation continues but slower. Berkshire was still a net seller of equities ($24.1B sales vs. $15.9B purchases = $8.2B net divestiture), but the gap shrank dramatically. In 1Q25, sales were only $4.7B. The big change: Berkshire is buying again — $15.9B in purchases vs. $3.2B a year ago. Tax gains on equity sales were $7.2B in Q1 (vs. $3.1B in Q1 25), implying continued trimming of long-held low-basis positions.

g) "Banks, insurance and finance" portfolio shrunk dramatically. This category fell from $104.1B fair value at 12/31/25 to $84.6B at 3/31/26, with cost basis dropping $769M. Net unrealized gains in the bucket dropped ~$18.8B. Some of this is mark-to-market (BAC down, AmEx flat-ish), but cost basis reduction signals continued bank-stock selling. Meanwhile, "Commercial, industrial and other" jumped from $98.7B to $112.4B fair value with cost basis up $3.0B — net buying in industrials/Chevron/Apple bucket.  [AI MADE AN ERROR, APPLE IS IN CONSUMER PRODUCTS, NOT C, I, & O]

h) Apple still in "Consumer products" but cost basis declining. Consumer products bucket cost basis dropped from $11.9B to $8.8B — a ~$3B sale, consistent with continued Apple trimming.

i) Float essentially flat at $176.9B (only +$500M Q/Q). Growth has stalled.

j) GEICO's loss ratio meaningfully deteriorated. Loss ratio 73.9% vs. 69.0% — bodily injury frequency up 5-7%, severity up 12-14%. Underwriting expenses up 29.3% on "increased policy acquisition-related expenses" — translation: GEICO is spending heavily to grow again. Net effect: GEICO underwriting profit fell from $2.17B → $1.42B (-35%). That's a big reversal of the GEICO turnaround story.

k) Goodwill impairment risk flagged. Four reporting units have estimated fair value not exceeding carrying value by at least 20%. Aggregate fair value $27.7B vs. carrying value $26.2B with $9.2B in goodwill at risk. That's a thin margin if conditions deteriorate. (This was disclosed in the 10-K too, but worth tracking.)

l) The Kraft Heinz overhang persists. Carrying value still exceeds fair value by $1.4B (15.7% of carrying value).Berkshire concluded no impairment, but explicitly notes its expectations could change. The Kraft Heinz fair value actually dropped Q/Q from $7.9B to $7.3B even as Berkshire held the carrying value.

m) Pilot swung to a $50M pre-tax LOSS vs. $168M profit a year ago — a $218M swing on a 7.8% revenue increase. Cause: hedging losses on rising fuel prices got recognized in earnings, while the offsetting inventory gains are deferred until sold. This is a timing artifact that should reverse.

n) Mass complaints in the James case. 1,760 individual class members have filed nine mass complaints, each seeking $5M economic + $25M noneconomic + 25% punitive damages per plaintiff. Even with the appeals victory, the sheer number of claimants is staggering.

o) Yen debt strategy continues. ¥272.3B ($1.7B) of new senior notes issued in April 2026 at 2.4% weighted average, maturities to 2056 — replacing ¥133.9B of maturing notes. Still funding the Japan trading-house position with cheap yen debt.

p) HomeServices Texas DTPA exposure. Two pending antitrust cases include Texas state law deceptive trade practices claims for ~$9 billion in damages (separate from the $250M Burnett settlement that's still on appeal at the 8th Circuit).

4. Why Each Operating Business Performed the Way It Did

Insurance Underwriting (after-tax: $1.72B vs. $1.34B, +28.5%)

• GEICO ($1.42B vs. $2.17B pre-tax, -34.8% hurt by higher private passenger auto claim frequencies (BI up 5-7%, PD/collision up 2-4%) and severities (BI up 12-14%) AND a 29.3% jump in underwriting expenses tied to policy acquisition. Loss ratio 73.9% vs. 69.0%; expense ratio 13.4% vs. 10.8%. Combined ratio worsened ~750 bps.
• BH Primary ($476M vs. $(144M) loss): swing driven by no Q1 catastrophes (vs. ~$300M from So Cal wildfires in Q1 25) and $176M of favorable prior-year reserve releases (vs. $212M of adverse development a year ago). Premium growth modest with RSUI down 14% (property), NICO Primary down 7% (commercial auto), offset by MedPro +7% and BHSI +3%.
• BHRG P&C ($637M vs. $68M): again, zero Q1 catastrophes (vs. $770M from So Cal wildfires in Q1 25). Premiums actually declined 6.2% on lower property reinsurance volumes due to "increased competition and lower rates" — a clear soft market signal. $260M of favorable PYD on property covers.
• BHRG Life/Health: $126M vs. $70M — gains in France, Asia, UK; partial offset by Australia decline.
• Retro reinsurance: $246M loss (vs. $209M) — purely deferred charge accretion.

Insurance Investment Income (after-tax: $2.68B vs. $2.89B, -7.4%)

• Pre-tax interest income fell 10.3% — the explicit reason given is lower interest rates. Dividend income essentially flat.

BNSF (after-tax: $1.38B vs. $1.21B, +13.4%)

• Volume +2.2%, revenue per car +2.8%, fuel surcharge benefit. The drivers: Ag/Energy +14.8% revenue (grain, petroleum fuels, oilseeds); Industrial +2.3% (despite housing softness hurting plastics/building products); Coal +1.1% (utility retirements offset by higher demand from elevated nat-gas prices); Consumer products flat (intl intermodal up). Operating ratio improved from 67.9% to 65.6% — fuel efficiency offset higher prices, productivity offset wage inflation.

BHE (after-tax: $1.11B vs. $1.10B, +1.5%) — composition changed dramatically

• U.S. utilities -16.1% (PacifiCorp/MEC/NV Energy): higher operating costs (vegetation management, wildfire prevention, plant maintenance, insurance, technology) and higher interest expense; less production tax credit benefit.
• Natural gas pipelines +24.2%: rate case benefits and higher LNG variable revenue from cold Q1 weather.
• Other energy -26.5%: Northern Powergrid hurt by lower UK distribution tariffs from inflation adjustments + higher interest expense.
• Real estate brokerage: still losing money; "limited availability of homes for sale and high home prices" cited.

Manufacturing, Service & Retailing (after-tax: $3.20B vs. $3.06B, +4.5%)

Manufacturing pre-tax +12.6%:

• Industrial products +22.1% (revenue +23.6% boosted by OxyChem, Bell Labs):
  • PCC +32.9% pre-tax: aerospace +9.4%, IGT +18.9%; lapping a Q1 25 fasteners-facility fire; mix improvements.
  • Lubrizol +8.1%: volume + no-repeat of restructuring; raw material inflation noted as a Q2 headwind.
  • Marmon +1.3%: mostly flat; copper spreads helped Plumbing/Electrical, Rail & Leasing weak.
  • IMC +41.9%: customers accelerating purchases (likely tariff/inflation pull-forward); Berkshire explicitly warns this won't continue.
  • OxyChem (new): small pre-tax loss in Q1 due to acquisition accounting amortization plus higher maintenance/utility/property tax/material costs.
• Building products -9.2% (revenue -2.9%): Clayton home unit sales -9.7% volumes, slow housing market. Clayton financial services up 9.6% on higher rates and balances.
• Consumer products +29.6% (revenue -1.5%): Forest River SG&A discipline, Duracell got more advanced manufacturing PTC, Brooks gains; offset by Fruit of the Loom exit of unprofitable lines and Garan/Jazwares declines.

Service & Retailing:

• Service +21.1% pre-tax ($785M vs. $648M): TTI revenue +26.2% (customers responding to "potential further price increases and supply chain concerns" — translation: tariff front-running); aviation services +11.8% on more aircraft and hours; IPS +23.7% on life sciences and data center construction.
• McLane -20.4%: retail sales down 8.0% (net customer losses); restaurant business up; lower gross margins.
• Retailing +1.0%: BHA +3.7% (service contracts) on lower vehicle sales (-4.3%); other retailers down 11.9% on "higher economic uncertainty and changes in consumer confidence."
• Pilot -129.8%: hedging losses recognized as fuel prices rose, with offsetting inventory gains deferred — a timing mismatch that should reverse.

5. Other Items Worth Flagging

• OxyChem deal closed 1/2/26 for ~$9.5B, with assets preliminarily $10.8B and liabilities $1.3B — implying ~$0 of goodwill/intangibles bargain or near-asset-value purchase price. Occidental retained legacy environmental liabilities, which is a meaningful protective term.
• OECD Pillar Two: Berkshire says it does not currently expect material impact, citing the January 2026 OECD safe harbor for U.S.-parented multinationals.
• Capex guidance: BHE + BNSF expect ~$12.4B more in capex over the rest of 2026.
• Five largest equity holdings unchanged in identity: AmEx, Apple, BAC, Coca-Cola, Chevron — but down from 65% to 61% of the equity portfolio, suggesting some diversification.
• AmEx ownership at 22.2% (151.6M shares), still above the typical 20% threshold but still not equity-method due to Fed passivity commitments.
• NICO bankruptcy/environmental settlement: $535M to bankruptcy estate pending court approval; CDESA filed 4/3/26 with EPA and state environmental agencies — these should clean up legacy non-insurance affiliate environmental exposure once approved.
• Consolidated cash + T-bills (net of payables): $373.5B at 3/31. Continues to sit near record levels even with the $9.5B OxyChem outlay.

Bottom Line

The headline "earnings doubled YoY" is largely a function of (a) no significant catastrophes vs. $1.1B+ from the So Cal wildfires in Q1 25 and (b) FX swinging from a $713M after-tax loss to a $249M gain on yen/euro debt. Underlying operating performance was mixed: GEICO's combined ratio deteriorated meaningfully, U.S. utilities are absorbing higher wildfire-related costs, the property reinsurance market is softening, and the housing complex (Clayton, building products, HomeServices, retailing) continues to struggle. The bright spots are BNSF efficiency, natural gas pipelines, PCC aerospace, and TTI.

The two most important under-the-radar items are (1) the resumption of buybacks under Abel (tiny but symbolically meaningful, and consistent with the ~1.4x P/B), and (2) the Tokio Marine 10-year quota share as a major new long-duration reinsurance relationship. The PacifiCorp Phase I reversal is the biggest post-quarter event, materially de-risking what had been one of Berkshire's largest open contingent exposures.

[Spooky]

6 minutes ago, gfp said:

n case anybody is interested in this Opus 4.7 summary I had it prepare from the 10Q, I will copy and paste it below.  It made some errors but minor.

Thanks GFP. Do you have a set of prompts you would be willing to share for analyzing 10Qs?

[Gamecock-YT]

If you’d taken a shot every time someone said 'operational excellence' yesterday, you would have ended up in the emergency room getting your stomach pumped. I’ll give Greg credit, the review before the Q&A was actually well done. It’s just a shame that the substance was immediately buried under a mountain of inane corporate buzzwords.

[73 Reds]

1 hour ago, Spooky said:

Thanks GFP. Do you have a set of prompts you would be willing to share for analyzing 10Qs?

That's a pretty comprehensive summary.  One comment re. Geico:  Combined ratio "deterioration" from a 7X CR to an 8X CR is hardly unexpected.  As Greg stated, any CR that begins with an "8" is a good thing.

[sleepydragon]

7 hours ago, mengan said:

 

It is obviously getting worse each year. I hope he is seeing a doctor.

I am not a doctor but  this sort of disease is basically some protein that regulates the electrical signals in the brain , essentially for calming them down, are not being produced by the body. But it’s a neuro disease not a brain disease or terminal disease. So it doesn’t affect his logical reasoning . Millions of Americans living with such conditions. 

[gfp]

56 minutes ago, 73 Reds said:

That's a pretty comprehensive summary.  One comment re. Geico:  Combined ratio "deterioration" from a 7X CR to an 8X CR is hardly unexpected.  As Greg stated, any CR that begins with an "8" is a good thing.

 

Yes, I criticized the AI for not phrasing it as a move towards normalization of the CR and scolded it on a few other issues.  It says it will remember my corrections but I know it won't.  It won't even be the same model this time next quarter

[sleepydragon]

2 hours ago, gfp said:

In case anybody is interested in this Opus 4.7 summary I had it prepare from the 10Q, I will copy and paste it below.  It made some errors but minor.

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Berkshire Hathaway 1Q 2026 10-Q — Deep Read

1. Repurchases (Q1 2026 and subsequent)

Q1 2026 repurchases (Item 2, Part II):

• Class A: 33 shares at avg $729,701.17 — all in March
• Class B: 431,462 shares at avg $486.92 — all in March
• Total: ~$235 million, or roughly 321 A-equivalent shares

That's a token amount on a $1 trillion+ company — but the signal is what's notable. The last reported buyback before this was Q1 2024. Berkshire bought back zero stock for all of 2025. The fact that Greg Abel (now CEO as of 1/1/26) flipped the switch back on in March, even at a tiny scale, is the story. The $729,701 average A price puts the buyback meaningfully below quarter-end book value. [AI MADE AN ERROR HERE]

Subsequent to quarter-end: Comparing the 3/31/26 share counts (Note 18) against the 4/14/26 cover-page counts:

• Class A went from 505,951 → 505,697 (down 254)
• Class B went from 1,397,927,677 → 1,398,308,677 (up 381,000)
• 254 × 1,500 = 381,000 — i.e., the Class A drop is fully explained by A→B conversions

No additional repurchases occurred between 3/31/26 and 4/14/26. The Q1 buyback was a one-shot in March. (CNBC headlines suggest Abel personally bought stock too, but the 10-Q only covers company repurchases.)

2. Book Value Per Share & P/B Ratio

Item	Value
Berkshire shareholders' equity (excl. NCI of $2,269M)	$727,181 million
Equivalent Class A shares outstanding 3/31/26	1,437,903
Book value per Class A share	$505,723
Book value per Class B share	$337.15
BRK.A price (close, 5/1/26)	$710,300
P/B ratio (Class A)	1.405x
BRK.B price (close, 5/1/26)	$473.01
P/B ratio (Class B)	1.403x

A P/B around 1.40x is below the post-2022 trading range and is the kind of multiple where Buffett historically said he'd be "aggressive" on buybacks. In this context, the resumption of buybacks at an average BRK.A price of $729,701 (~1.44x book at the 12/31/25 BV per share of ~$498,839) makes sense.

3. Under-the-Radar Disclosures Worth Highlighting

a) The Tokio Marine deal — buried in BHRG section. On 3/23/26, NICO entered a whole-account quota-share reinsurance agreement with Tokio Marine Holdings subsidiaries assuming "a portion of the net non-life premiums written and related losses and expenses…on risks attaching over a ten-year term commencing April 1, 2026." Berkshire says it "is expected to generate meaningful premium volumes over its term." This is a major new long-duration reinsurance relationship — barely flagged in one paragraph.

b) PacifiCorp wildfire reversal. On April 8, 2026 (after quarter-end), the Oregon Court of Appeals reversed and remanded the entire James Phase I liability verdict, finding the trial court's "evidence applies to all class members" jury instruction was prejudicial error. The appeals court also explicitly said the trial court can reconsider class certification. Phase II trials were stayed April 9 and the parties were ordered to mandatory mediation. The $719M in posted bonds "could eventually be discharged." Cumulative wildfire accrual remains $2.9B with $577M unpaid at 3/31; PacifiCorp paid $584M in Q1 settlements alone.

c) PacifiCorp selling off Washington operations. On 2/15/26, PacifiCorp signed an Asset Purchase and Service Area Transfer Agreement to sell its Washington operations to Portland General Electric for $1.9 billion in cash, expected to close 1H 2027. Continued shrinkage of PacifiCorp's wildfire-exposed footprint.

d) Massive Treasury bill settlement timing oddity. Unsettled T-bill purchases were $17.2 billion at 3/31/26 vs. $167 million at 12/31/25. This goes through both the asset side (in the $339B short-term Treasuries figure) and as a payable on the liability side. It means quarter-end "cash + Treasuries" optics are inflated by ~$17B that effectively cleared days later. On a settled basis, the cash + T-bill pile is ~$373.5B (per MD&A), not the $390B+ implied by the gross figures.

e) Tax rate normalized hard. Effective tax rate jumped to 17.4% from 9.2% a year ago. The 9.2% in Q1 25 was distorted by the big investment loss; the 17.4% is closer to a normal run-rate now that pre-tax earnings include a $325M pre-tax FX gain (vs. a $936M FX loss in 1Q25), which together with much smaller equity mark-to-market losses made the denominator bigger.

f) Equity portfolio rotation continues but slower. Berkshire was still a net seller of equities ($24.1B sales vs. $15.9B purchases = $8.2B net divestiture), but the gap shrank dramatically. In 1Q25, sales were only $4.7B. The big change: Berkshire is buying again — $15.9B in purchases vs. $3.2B a year ago. Tax gains on equity sales were $7.2B in Q1 (vs. $3.1B in Q1 25), implying continued trimming of long-held low-basis positions.

g) "Banks, insurance and finance" portfolio shrunk dramatically. This category fell from $104.1B fair value at 12/31/25 to $84.6B at 3/31/26, with cost basis dropping $769M. Net unrealized gains in the bucket dropped ~$18.8B. Some of this is mark-to-market (BAC down, AmEx flat-ish), but cost basis reduction signals continued bank-stock selling. Meanwhile, "Commercial, industrial and other" jumped from $98.7B to $112.4B fair value with cost basis up $3.0B — net buying in industrials/Chevron/Apple bucket.  [AI MADE AN ERROR, APPLE IS IN CONSUMER PRODUCTS, NOT C, I, & O]

h) Apple still in "Consumer products" but cost basis declining. Consumer products bucket cost basis dropped from $11.9B to $8.8B — a ~$3B sale, consistent with continued Apple trimming.

i) Float essentially flat at $176.9B (only +$500M Q/Q). Growth has stalled.

j) GEICO's loss ratio meaningfully deteriorated. Loss ratio 73.9% vs. 69.0% — bodily injury frequency up 5-7%, severity up 12-14%. Underwriting expenses up 29.3% on "increased policy acquisition-related expenses" — translation: GEICO is spending heavily to grow again. Net effect: GEICO underwriting profit fell from $2.17B → $1.42B (-35%). That's a big reversal of the GEICO turnaround story.

k) Goodwill impairment risk flagged. Four reporting units have estimated fair value not exceeding carrying value by at least 20%. Aggregate fair value $27.7B vs. carrying value $26.2B with $9.2B in goodwill at risk. That's a thin margin if conditions deteriorate. (This was disclosed in the 10-K too, but worth tracking.)

l) The Kraft Heinz overhang persists. Carrying value still exceeds fair value by $1.4B (15.7% of carrying value).Berkshire concluded no impairment, but explicitly notes its expectations could change. The Kraft Heinz fair value actually dropped Q/Q from $7.9B to $7.3B even as Berkshire held the carrying value.

m) Pilot swung to a $50M pre-tax LOSS vs. $168M profit a year ago — a $218M swing on a 7.8% revenue increase. Cause: hedging losses on rising fuel prices got recognized in earnings, while the offsetting inventory gains are deferred until sold. This is a timing artifact that should reverse.

n) Mass complaints in the James case. 1,760 individual class members have filed nine mass complaints, each seeking $5M economic + $25M noneconomic + 25% punitive damages per plaintiff. Even with the appeals victory, the sheer number of claimants is staggering.

o) Yen debt strategy continues. ¥272.3B ($1.7B) of new senior notes issued in April 2026 at 2.4% weighted average, maturities to 2056 — replacing ¥133.9B of maturing notes. Still funding the Japan trading-house position with cheap yen debt.

p) HomeServices Texas DTPA exposure. Two pending antitrust cases include Texas state law deceptive trade practices claims for ~$9 billion in damages (separate from the $250M Burnett settlement that's still on appeal at the 8th Circuit).

4. Why Each Operating Business Performed the Way It Did

Insurance Underwriting (after-tax: $1.72B vs. $1.34B, +28.5%)

• GEICO ($1.42B vs. $2.17B pre-tax, -34.8% hurt by higher private passenger auto claim frequencies (BI up 5-7%, PD/collision up 2-4%) and severities (BI up 12-14%) AND a 29.3% jump in underwriting expenses tied to policy acquisition. Loss ratio 73.9% vs. 69.0%; expense ratio 13.4% vs. 10.8%. Combined ratio worsened ~750 bps.
• BH Primary ($476M vs. $(144M) loss): swing driven by no Q1 catastrophes (vs. ~$300M from So Cal wildfires in Q1 25) and $176M of favorable prior-year reserve releases (vs. $212M of adverse development a year ago). Premium growth modest with RSUI down 14% (property), NICO Primary down 7% (commercial auto), offset by MedPro +7% and BHSI +3%.
• BHRG P&C ($637M vs. $68M): again, zero Q1 catastrophes (vs. $770M from So Cal wildfires in Q1 25). Premiums actually declined 6.2% on lower property reinsurance volumes due to "increased competition and lower rates" — a clear soft market signal. $260M of favorable PYD on property covers.
• BHRG Life/Health: $126M vs. $70M — gains in France, Asia, UK; partial offset by Australia decline.
• Retro reinsurance: $246M loss (vs. $209M) — purely deferred charge accretion.

Insurance Investment Income (after-tax: $2.68B vs. $2.89B, -7.4%)

• Pre-tax interest income fell 10.3% — the explicit reason given is lower interest rates. Dividend income essentially flat.

BNSF (after-tax: $1.38B vs. $1.21B, +13.4%)

• Volume +2.2%, revenue per car +2.8%, fuel surcharge benefit. The drivers: Ag/Energy +14.8% revenue (grain, petroleum fuels, oilseeds); Industrial +2.3% (despite housing softness hurting plastics/building products); Coal +1.1% (utility retirements offset by higher demand from elevated nat-gas prices); Consumer products flat (intl intermodal up). Operating ratio improved from 67.9% to 65.6% — fuel efficiency offset higher prices, productivity offset wage inflation.

BHE (after-tax: $1.11B vs. $1.10B, +1.5%) — composition changed dramatically

• U.S. utilities -16.1% (PacifiCorp/MEC/NV Energy): higher operating costs (vegetation management, wildfire prevention, plant maintenance, insurance, technology) and higher interest expense; less production tax credit benefit.
• Natural gas pipelines +24.2%: rate case benefits and higher LNG variable revenue from cold Q1 weather.
• Other energy -26.5%: Northern Powergrid hurt by lower UK distribution tariffs from inflation adjustments + higher interest expense.
• Real estate brokerage: still losing money; "limited availability of homes for sale and high home prices" cited.

Manufacturing, Service & Retailing (after-tax: $3.20B vs. $3.06B, +4.5%)

Manufacturing pre-tax +12.6%:

• Industrial products +22.1% (revenue +23.6% boosted by OxyChem, Bell Labs):
  • PCC +32.9% pre-tax: aerospace +9.4%, IGT +18.9%; lapping a Q1 25 fasteners-facility fire; mix improvements.
  • Lubrizol +8.1%: volume + no-repeat of restructuring; raw material inflation noted as a Q2 headwind.
  • Marmon +1.3%: mostly flat; copper spreads helped Plumbing/Electrical, Rail & Leasing weak.
  • IMC +41.9%: customers accelerating purchases (likely tariff/inflation pull-forward); Berkshire explicitly warns this won't continue.
  • OxyChem (new): small pre-tax loss in Q1 due to acquisition accounting amortization plus higher maintenance/utility/property tax/material costs.
• Building products -9.2% (revenue -2.9%): Clayton home unit sales -9.7% volumes, slow housing market. Clayton financial services up 9.6% on higher rates and balances.
• Consumer products +29.6% (revenue -1.5%): Forest River SG&A discipline, Duracell got more advanced manufacturing PTC, Brooks gains; offset by Fruit of the Loom exit of unprofitable lines and Garan/Jazwares declines.

Service & Retailing:

• Service +21.1% pre-tax ($785M vs. $648M): TTI revenue +26.2% (customers responding to "potential further price increases and supply chain concerns" — translation: tariff front-running); aviation services +11.8% on more aircraft and hours; IPS +23.7% on life sciences and data center construction.
• McLane -20.4%: retail sales down 8.0% (net customer losses); restaurant business up; lower gross margins.
• Retailing +1.0%: BHA +3.7% (service contracts) on lower vehicle sales (-4.3%); other retailers down 11.9% on "higher economic uncertainty and changes in consumer confidence."
• Pilot -129.8%: hedging losses recognized as fuel prices rose, with offsetting inventory gains deferred — a timing mismatch that should reverse.

5. Other Items Worth Flagging

• OxyChem deal closed 1/2/26 for ~$9.5B, with assets preliminarily $10.8B and liabilities $1.3B — implying ~$0 of goodwill/intangibles bargain or near-asset-value purchase price. Occidental retained legacy environmental liabilities, which is a meaningful protective term.
• OECD Pillar Two: Berkshire says it does not currently expect material impact, citing the January 2026 OECD safe harbor for U.S.-parented multinationals.
• Capex guidance: BHE + BNSF expect ~$12.4B more in capex over the rest of 2026.
• Five largest equity holdings unchanged in identity: AmEx, Apple, BAC, Coca-Cola, Chevron — but down from 65% to 61% of the equity portfolio, suggesting some diversification.
• AmEx ownership at 22.2% (151.6M shares), still above the typical 20% threshold but still not equity-method due to Fed passivity commitments.
• NICO bankruptcy/environmental settlement: $535M to bankruptcy estate pending court approval; CDESA filed 4/3/26 with EPA and state environmental agencies — these should clean up legacy non-insurance affiliate environmental exposure once approved.
• Consolidated cash + T-bills (net of payables): $373.5B at 3/31. Continues to sit near record levels even with the $9.5B OxyChem outlay.

Bottom Line

The headline "earnings doubled YoY" is largely a function of (a) no significant catastrophes vs. $1.1B+ from the So Cal wildfires in Q1 25 and (b) FX swinging from a $713M after-tax loss to a $249M gain on yen/euro debt. Underlying operating performance was mixed: GEICO's combined ratio deteriorated meaningfully, U.S. utilities are absorbing higher wildfire-related costs, the property reinsurance market is softening, and the housing complex (Clayton, building products, HomeServices, retailing) continues to struggle. The bright spots are BNSF efficiency, natural gas pipelines, PCC aerospace, and TTI.

The two most important under-the-radar items are (1) the resumption of buybacks under Abel (tiny but symbolically meaningful, and consistent with the ~1.4x P/B), and (2) the Tokio Marine 10-year quota share as a major new long-duration reinsurance relationship. The PacifiCorp Phase I reversal is the biggest post-quarter event, materially de-risking what had been one of Berkshire's largest open contingent exposures.

i am also add Greg is putting all his annual salary buying brk stocks— that’s pretty impressive . Definitely skin in the game.

[cubsfan]

3 hours ago, gfp said:

In case anybody is interested in this Opus 4.7 summary I had it prepare from the 10Q, I will copy and paste it below.  It made some errors but minor.

------------

 

Berkshire Hathaway 1Q 2026 10-Q — Deep Read

1. Repurchases (Q1 2026 and subsequent)

Q1 2026 repurchases (Item 2, Part II):

• Class A: 33 shares at avg $729,701.17 — all in March
• Class B: 431,462 shares at avg $486.92 — all in March
• Total: ~$235 million, or roughly 321 A-equivalent shares

That's a token amount on a $1 trillion+ company — but the signal is what's notable. The last reported buyback before this was Q1 2024. Berkshire bought back zero stock for all of 2025. The fact that Greg Abel (now CEO as of 1/1/26) flipped the switch back on in March, even at a tiny scale, is the story. The $729,701 average A price puts the buyback meaningfully below quarter-end book value. [AI MADE AN ERROR HERE]

Subsequent to quarter-end: Comparing the 3/31/26 share counts (Note 18) against the 4/14/26 cover-page counts:

• Class A went from 505,951 → 505,697 (down 254)
• Class B went from 1,397,927,677 → 1,398,308,677 (up 381,000)
• 254 × 1,500 = 381,000 — i.e., the Class A drop is fully explained by A→B conversions

No additional repurchases occurred between 3/31/26 and 4/14/26. The Q1 buyback was a one-shot in March. (CNBC headlines suggest Abel personally bought stock too, but the 10-Q only covers company repurchases.)

2. Book Value Per Share & P/B Ratio

Item	Value
Berkshire shareholders' equity (excl. NCI of $2,269M)	$727,181 million
Equivalent Class A shares outstanding 3/31/26	1,437,903
Book value per Class A share	$505,723
Book value per Class B share	$337.15
BRK.A price (close, 5/1/26)	$710,300
P/B ratio (Class A)	1.405x
BRK.B price (close, 5/1/26)	$473.01
P/B ratio (Class B)	1.403x

A P/B around 1.40x is below the post-2022 trading range and is the kind of multiple where Buffett historically said he'd be "aggressive" on buybacks. In this context, the resumption of buybacks at an average BRK.A price of $729,701 (~1.44x book at the 12/31/25 BV per share of ~$498,839) makes sense.

3. Under-the-Radar Disclosures Worth Highlighting

a) The Tokio Marine deal — buried in BHRG section. On 3/23/26, NICO entered a whole-account quota-share reinsurance agreement with Tokio Marine Holdings subsidiaries assuming "a portion of the net non-life premiums written and related losses and expenses…on risks attaching over a ten-year term commencing April 1, 2026." Berkshire says it "is expected to generate meaningful premium volumes over its term." This is a major new long-duration reinsurance relationship — barely flagged in one paragraph.

b) PacifiCorp wildfire reversal. On April 8, 2026 (after quarter-end), the Oregon Court of Appeals reversed and remanded the entire James Phase I liability verdict, finding the trial court's "evidence applies to all class members" jury instruction was prejudicial error. The appeals court also explicitly said the trial court can reconsider class certification. Phase II trials were stayed April 9 and the parties were ordered to mandatory mediation. The $719M in posted bonds "could eventually be discharged." Cumulative wildfire accrual remains $2.9B with $577M unpaid at 3/31; PacifiCorp paid $584M in Q1 settlements alone.

c) PacifiCorp selling off Washington operations. On 2/15/26, PacifiCorp signed an Asset Purchase and Service Area Transfer Agreement to sell its Washington operations to Portland General Electric for $1.9 billion in cash, expected to close 1H 2027. Continued shrinkage of PacifiCorp's wildfire-exposed footprint.

d) Massive Treasury bill settlement timing oddity. Unsettled T-bill purchases were $17.2 billion at 3/31/26 vs. $167 million at 12/31/25. This goes through both the asset side (in the $339B short-term Treasuries figure) and as a payable on the liability side. It means quarter-end "cash + Treasuries" optics are inflated by ~$17B that effectively cleared days later. On a settled basis, the cash + T-bill pile is ~$373.5B (per MD&A), not the $390B+ implied by the gross figures.

e) Tax rate normalized hard. Effective tax rate jumped to 17.4% from 9.2% a year ago. The 9.2% in Q1 25 was distorted by the big investment loss; the 17.4% is closer to a normal run-rate now that pre-tax earnings include a $325M pre-tax FX gain (vs. a $936M FX loss in 1Q25), which together with much smaller equity mark-to-market losses made the denominator bigger.

f) Equity portfolio rotation continues but slower. Berkshire was still a net seller of equities ($24.1B sales vs. $15.9B purchases = $8.2B net divestiture), but the gap shrank dramatically. In 1Q25, sales were only $4.7B. The big change: Berkshire is buying again — $15.9B in purchases vs. $3.2B a year ago. Tax gains on equity sales were $7.2B in Q1 (vs. $3.1B in Q1 25), implying continued trimming of long-held low-basis positions.

g) "Banks, insurance and finance" portfolio shrunk dramatically. This category fell from $104.1B fair value at 12/31/25 to $84.6B at 3/31/26, with cost basis dropping $769M. Net unrealized gains in the bucket dropped ~$18.8B. Some of this is mark-to-market (BAC down, AmEx flat-ish), but cost basis reduction signals continued bank-stock selling. Meanwhile, "Commercial, industrial and other" jumped from $98.7B to $112.4B fair value with cost basis up $3.0B — net buying in industrials/Chevron/Apple bucket.  [AI MADE AN ERROR, APPLE IS IN CONSUMER PRODUCTS, NOT C, I, & O]

h) Apple still in "Consumer products" but cost basis declining. Consumer products bucket cost basis dropped from $11.9B to $8.8B — a ~$3B sale, consistent with continued Apple trimming.

i) Float essentially flat at $176.9B (only +$500M Q/Q). Growth has stalled.

j) GEICO's loss ratio meaningfully deteriorated. Loss ratio 73.9% vs. 69.0% — bodily injury frequency up 5-7%, severity up 12-14%. Underwriting expenses up 29.3% on "increased policy acquisition-related expenses" — translation: GEICO is spending heavily to grow again. Net effect: GEICO underwriting profit fell from $2.17B → $1.42B (-35%). That's a big reversal of the GEICO turnaround story.

k) Goodwill impairment risk flagged. Four reporting units have estimated fair value not exceeding carrying value by at least 20%. Aggregate fair value $27.7B vs. carrying value $26.2B with $9.2B in goodwill at risk. That's a thin margin if conditions deteriorate. (This was disclosed in the 10-K too, but worth tracking.)

l) The Kraft Heinz overhang persists. Carrying value still exceeds fair value by $1.4B (15.7% of carrying value).Berkshire concluded no impairment, but explicitly notes its expectations could change. The Kraft Heinz fair value actually dropped Q/Q from $7.9B to $7.3B even as Berkshire held the carrying value.

m) Pilot swung to a $50M pre-tax LOSS vs. $168M profit a year ago — a $218M swing on a 7.8% revenue increase. Cause: hedging losses on rising fuel prices got recognized in earnings, while the offsetting inventory gains are deferred until sold. This is a timing artifact that should reverse.

n) Mass complaints in the James case. 1,760 individual class members have filed nine mass complaints, each seeking $5M economic + $25M noneconomic + 25% punitive damages per plaintiff. Even with the appeals victory, the sheer number of claimants is staggering.

o) Yen debt strategy continues. ¥272.3B ($1.7B) of new senior notes issued in April 2026 at 2.4% weighted average, maturities to 2056 — replacing ¥133.9B of maturing notes. Still funding the Japan trading-house position with cheap yen debt.

p) HomeServices Texas DTPA exposure. Two pending antitrust cases include Texas state law deceptive trade practices claims for ~$9 billion in damages (separate from the $250M Burnett settlement that's still on appeal at the 8th Circuit).

4. Why Each Operating Business Performed the Way It Did

Insurance Underwriting (after-tax: $1.72B vs. $1.34B, +28.5%)

• GEICO ($1.42B vs. $2.17B pre-tax, -34.8% hurt by higher private passenger auto claim frequencies (BI up 5-7%, PD/collision up 2-4%) and severities (BI up 12-14%) AND a 29.3% jump in underwriting expenses tied to policy acquisition. Loss ratio 73.9% vs. 69.0%; expense ratio 13.4% vs. 10.8%. Combined ratio worsened ~750 bps.
• BH Primary ($476M vs. $(144M) loss): swing driven by no Q1 catastrophes (vs. ~$300M from So Cal wildfires in Q1 25) and $176M of favorable prior-year reserve releases (vs. $212M of adverse development a year ago). Premium growth modest with RSUI down 14% (property), NICO Primary down 7% (commercial auto), offset by MedPro +7% and BHSI +3%.
• BHRG P&C ($637M vs. $68M): again, zero Q1 catastrophes (vs. $770M from So Cal wildfires in Q1 25). Premiums actually declined 6.2% on lower property reinsurance volumes due to "increased competition and lower rates" — a clear soft market signal. $260M of favorable PYD on property covers.
• BHRG Life/Health: $126M vs. $70M — gains in France, Asia, UK; partial offset by Australia decline.
• Retro reinsurance: $246M loss (vs. $209M) — purely deferred charge accretion.

Insurance Investment Income (after-tax: $2.68B vs. $2.89B, -7.4%)

• Pre-tax interest income fell 10.3% — the explicit reason given is lower interest rates. Dividend income essentially flat.

BNSF (after-tax: $1.38B vs. $1.21B, +13.4%)

• Volume +2.2%, revenue per car +2.8%, fuel surcharge benefit. The drivers: Ag/Energy +14.8% revenue (grain, petroleum fuels, oilseeds); Industrial +2.3% (despite housing softness hurting plastics/building products); Coal +1.1% (utility retirements offset by higher demand from elevated nat-gas prices); Consumer products flat (intl intermodal up). Operating ratio improved from 67.9% to 65.6% — fuel efficiency offset higher prices, productivity offset wage inflation.

BHE (after-tax: $1.11B vs. $1.10B, +1.5%) — composition changed dramatically

• U.S. utilities -16.1% (PacifiCorp/MEC/NV Energy): higher operating costs (vegetation management, wildfire prevention, plant maintenance, insurance, technology) and higher interest expense; less production tax credit benefit.
• Natural gas pipelines +24.2%: rate case benefits and higher LNG variable revenue from cold Q1 weather.
• Other energy -26.5%: Northern Powergrid hurt by lower UK distribution tariffs from inflation adjustments + higher interest expense.
• Real estate brokerage: still losing money; "limited availability of homes for sale and high home prices" cited.

Manufacturing, Service & Retailing (after-tax: $3.20B vs. $3.06B, +4.5%)

Manufacturing pre-tax +12.6%:

• Industrial products +22.1% (revenue +23.6% boosted by OxyChem, Bell Labs):
  • PCC +32.9% pre-tax: aerospace +9.4%, IGT +18.9%; lapping a Q1 25 fasteners-facility fire; mix improvements.
  • Lubrizol +8.1%: volume + no-repeat of restructuring; raw material inflation noted as a Q2 headwind.
  • Marmon +1.3%: mostly flat; copper spreads helped Plumbing/Electrical, Rail & Leasing weak.
  • IMC +41.9%: customers accelerating purchases (likely tariff/inflation pull-forward); Berkshire explicitly warns this won't continue.
  • OxyChem (new): small pre-tax loss in Q1 due to acquisition accounting amortization plus higher maintenance/utility/property tax/material costs.
• Building products -9.2% (revenue -2.9%): Clayton home unit sales -9.7% volumes, slow housing market. Clayton financial services up 9.6% on higher rates and balances.
• Consumer products +29.6% (revenue -1.5%): Forest River SG&A discipline, Duracell got more advanced manufacturing PTC, Brooks gains; offset by Fruit of the Loom exit of unprofitable lines and Garan/Jazwares declines.

Service & Retailing:

• Service +21.1% pre-tax ($785M vs. $648M): TTI revenue +26.2% (customers responding to "potential further price increases and supply chain concerns" — translation: tariff front-running); aviation services +11.8% on more aircraft and hours; IPS +23.7% on life sciences and data center construction.
• McLane -20.4%: retail sales down 8.0% (net customer losses); restaurant business up; lower gross margins.
• Retailing +1.0%: BHA +3.7% (service contracts) on lower vehicle sales (-4.3%); other retailers down 11.9% on "higher economic uncertainty and changes in consumer confidence."
• Pilot -129.8%: hedging losses recognized as fuel prices rose, with offsetting inventory gains deferred — a timing mismatch that should reverse.

5. Other Items Worth Flagging

• OxyChem deal closed 1/2/26 for ~$9.5B, with assets preliminarily $10.8B and liabilities $1.3B — implying ~$0 of goodwill/intangibles bargain or near-asset-value purchase price. Occidental retained legacy environmental liabilities, which is a meaningful protective term.
• OECD Pillar Two: Berkshire says it does not currently expect material impact, citing the January 2026 OECD safe harbor for U.S.-parented multinationals.
• Capex guidance: BHE + BNSF expect ~$12.4B more in capex over the rest of 2026.
• Five largest equity holdings unchanged in identity: AmEx, Apple, BAC, Coca-Cola, Chevron — but down from 65% to 61% of the equity portfolio, suggesting some diversification.
• AmEx ownership at 22.2% (151.6M shares), still above the typical 20% threshold but still not equity-method due to Fed passivity commitments.
• NICO bankruptcy/environmental settlement: $535M to bankruptcy estate pending court approval; CDESA filed 4/3/26 with EPA and state environmental agencies — these should clean up legacy non-insurance affiliate environmental exposure once approved.
• Consolidated cash + T-bills (net of payables): $373.5B at 3/31. Continues to sit near record levels even with the $9.5B OxyChem outlay.

Bottom Line

The headline "earnings doubled YoY" is largely a function of (a) no significant catastrophes vs. $1.1B+ from the So Cal wildfires in Q1 25 and (b) FX swinging from a $713M after-tax loss to a $249M gain on yen/euro debt. Underlying operating performance was mixed: GEICO's combined ratio deteriorated meaningfully, U.S. utilities are absorbing higher wildfire-related costs, the property reinsurance market is softening, and the housing complex (Clayton, building products, HomeServices, retailing) continues to struggle. The bright spots are BNSF efficiency, natural gas pipelines, PCC aerospace, and TTI.

The two most important under-the-radar items are (1) the resumption of buybacks under Abel (tiny but symbolically meaningful, and consistent with the ~1.4x P/B), and (2) the Tokio Marine 10-year quota share as a major new long-duration reinsurance relationship. The PacifiCorp Phase I reversal is the biggest post-quarter event, materially de-risking what had been one of Berkshire's largest open contingent exposures.

 

Nice - thank you!

[Charlie]

3 hours ago, gfp said:

In case anybody is interested in this Opus 4.7 summary I had it prepare from the 10Q, I will copy and paste it below.  It made some errors but minor.

------------

 

Berkshire Hathaway 1Q 2026 10-Q — Deep Read

1. Repurchases (Q1 2026 and subsequent)

Q1 2026 repurchases (Item 2, Part II):

• Class A: 33 shares at avg $729,701.17 — all in March
• Class B: 431,462 shares at avg $486.92 — all in March
• Total: ~$235 million, or roughly 321 A-equivalent shares

That's a token amount on a $1 trillion+ company — but the signal is what's notable. The last reported buyback before this was Q1 2024. Berkshire bought back zero stock for all of 2025. The fact that Greg Abel (now CEO as of 1/1/26) flipped the switch back on in March, even at a tiny scale, is the story. The $729,701 average A price puts the buyback meaningfully below quarter-end book value. [AI MADE AN ERROR HERE]

Subsequent to quarter-end: Comparing the 3/31/26 share counts (Note 18) against the 4/14/26 cover-page counts:

• Class A went from 505,951 → 505,697 (down 254)
• Class B went from 1,397,927,677 → 1,398,308,677 (up 381,000)
• 254 × 1,500 = 381,000 — i.e., the Class A drop is fully explained by A→B conversions

No additional repurchases occurred between 3/31/26 and 4/14/26. The Q1 buyback was a one-shot in March. (CNBC headlines suggest Abel personally bought stock too, but the 10-Q only covers company repurchases.)

2. Book Value Per Share & P/B Ratio

Item	Value
Berkshire shareholders' equity (excl. NCI of $2,269M)	$727,181 million
Equivalent Class A shares outstanding 3/31/26	1,437,903
Book value per Class A share	$505,723
Book value per Class B share	$337.15
BRK.A price (close, 5/1/26)	$710,300
P/B ratio (Class A)	1.405x
BRK.B price (close, 5/1/26)	$473.01
P/B ratio (Class B)	1.403x

A P/B around 1.40x is below the post-2022 trading range and is the kind of multiple where Buffett historically said he'd be "aggressive" on buybacks. In this context, the resumption of buybacks at an average BRK.A price of $729,701 (~1.44x book at the 12/31/25 BV per share of ~$498,839) makes sense.

3. Under-the-Radar Disclosures Worth Highlighting

a) The Tokio Marine deal — buried in BHRG section. On 3/23/26, NICO entered a whole-account quota-share reinsurance agreement with Tokio Marine Holdings subsidiaries assuming "a portion of the net non-life premiums written and related losses and expenses…on risks attaching over a ten-year term commencing April 1, 2026." Berkshire says it "is expected to generate meaningful premium volumes over its term." This is a major new long-duration reinsurance relationship — barely flagged in one paragraph.

b) PacifiCorp wildfire reversal. On April 8, 2026 (after quarter-end), the Oregon Court of Appeals reversed and remanded the entire James Phase I liability verdict, finding the trial court's "evidence applies to all class members" jury instruction was prejudicial error. The appeals court also explicitly said the trial court can reconsider class certification. Phase II trials were stayed April 9 and the parties were ordered to mandatory mediation. The $719M in posted bonds "could eventually be discharged." Cumulative wildfire accrual remains $2.9B with $577M unpaid at 3/31; PacifiCorp paid $584M in Q1 settlements alone.

c) PacifiCorp selling off Washington operations. On 2/15/26, PacifiCorp signed an Asset Purchase and Service Area Transfer Agreement to sell its Washington operations to Portland General Electric for $1.9 billion in cash, expected to close 1H 2027. Continued shrinkage of PacifiCorp's wildfire-exposed footprint.

d) Massive Treasury bill settlement timing oddity. Unsettled T-bill purchases were $17.2 billion at 3/31/26 vs. $167 million at 12/31/25. This goes through both the asset side (in the $339B short-term Treasuries figure) and as a payable on the liability side. It means quarter-end "cash + Treasuries" optics are inflated by ~$17B that effectively cleared days later. On a settled basis, the cash + T-bill pile is ~$373.5B (per MD&A), not the $390B+ implied by the gross figures.

e) Tax rate normalized hard. Effective tax rate jumped to 17.4% from 9.2% a year ago. The 9.2% in Q1 25 was distorted by the big investment loss; the 17.4% is closer to a normal run-rate now that pre-tax earnings include a $325M pre-tax FX gain (vs. a $936M FX loss in 1Q25), which together with much smaller equity mark-to-market losses made the denominator bigger.

f) Equity portfolio rotation continues but slower. Berkshire was still a net seller of equities ($24.1B sales vs. $15.9B purchases = $8.2B net divestiture), but the gap shrank dramatically. In 1Q25, sales were only $4.7B. The big change: Berkshire is buying again — $15.9B in purchases vs. $3.2B a year ago. Tax gains on equity sales were $7.2B in Q1 (vs. $3.1B in Q1 25), implying continued trimming of long-held low-basis positions.

g) "Banks, insurance and finance" portfolio shrunk dramatically. This category fell from $104.1B fair value at 12/31/25 to $84.6B at 3/31/26, with cost basis dropping $769M. Net unrealized gains in the bucket dropped ~$18.8B. Some of this is mark-to-market (BAC down, AmEx flat-ish), but cost basis reduction signals continued bank-stock selling. Meanwhile, "Commercial, industrial and other" jumped from $98.7B to $112.4B fair value with cost basis up $3.0B — net buying in industrials/Chevron/Apple bucket.  [AI MADE AN ERROR, APPLE IS IN CONSUMER PRODUCTS, NOT C, I, & O]

h) Apple still in "Consumer products" but cost basis declining. Consumer products bucket cost basis dropped from $11.9B to $8.8B — a ~$3B sale, consistent with continued Apple trimming.

i) Float essentially flat at $176.9B (only +$500M Q/Q). Growth has stalled.

j) GEICO's loss ratio meaningfully deteriorated. Loss ratio 73.9% vs. 69.0% — bodily injury frequency up 5-7%, severity up 12-14%. Underwriting expenses up 29.3% on "increased policy acquisition-related expenses" — translation: GEICO is spending heavily to grow again. Net effect: GEICO underwriting profit fell from $2.17B → $1.42B (-35%). That's a big reversal of the GEICO turnaround story.

k) Goodwill impairment risk flagged. Four reporting units have estimated fair value not exceeding carrying value by at least 20%. Aggregate fair value $27.7B vs. carrying value $26.2B with $9.2B in goodwill at risk. That's a thin margin if conditions deteriorate. (This was disclosed in the 10-K too, but worth tracking.)

l) The Kraft Heinz overhang persists. Carrying value still exceeds fair value by $1.4B (15.7% of carrying value).Berkshire concluded no impairment, but explicitly notes its expectations could change. The Kraft Heinz fair value actually dropped Q/Q from $7.9B to $7.3B even as Berkshire held the carrying value.

m) Pilot swung to a $50M pre-tax LOSS vs. $168M profit a year ago — a $218M swing on a 7.8% revenue increase. Cause: hedging losses on rising fuel prices got recognized in earnings, while the offsetting inventory gains are deferred until sold. This is a timing artifact that should reverse.

n) Mass complaints in the James case. 1,760 individual class members have filed nine mass complaints, each seeking $5M economic + $25M noneconomic + 25% punitive damages per plaintiff. Even with the appeals victory, the sheer number of claimants is staggering.

o) Yen debt strategy continues. ¥272.3B ($1.7B) of new senior notes issued in April 2026 at 2.4% weighted average, maturities to 2056 — replacing ¥133.9B of maturing notes. Still funding the Japan trading-house position with cheap yen debt.

p) HomeServices Texas DTPA exposure. Two pending antitrust cases include Texas state law deceptive trade practices claims for ~$9 billion in damages (separate from the $250M Burnett settlement that's still on appeal at the 8th Circuit).

4. Why Each Operating Business Performed the Way It Did

Insurance Underwriting (after-tax: $1.72B vs. $1.34B, +28.5%)

• GEICO ($1.42B vs. $2.17B pre-tax, -34.8% hurt by higher private passenger auto claim frequencies (BI up 5-7%, PD/collision up 2-4%) and severities (BI up 12-14%) AND a 29.3% jump in underwriting expenses tied to policy acquisition. Loss ratio 73.9% vs. 69.0%; expense ratio 13.4% vs. 10.8%. Combined ratio worsened ~750 bps.
• BH Primary ($476M vs. $(144M) loss): swing driven by no Q1 catastrophes (vs. ~$300M from So Cal wildfires in Q1 25) and $176M of favorable prior-year reserve releases (vs. $212M of adverse development a year ago). Premium growth modest with RSUI down 14% (property), NICO Primary down 7% (commercial auto), offset by MedPro +7% and BHSI +3%.
• BHRG P&C ($637M vs. $68M): again, zero Q1 catastrophes (vs. $770M from So Cal wildfires in Q1 25). Premiums actually declined 6.2% on lower property reinsurance volumes due to "increased competition and lower rates" — a clear soft market signal. $260M of favorable PYD on property covers.
• BHRG Life/Health: $126M vs. $70M — gains in France, Asia, UK; partial offset by Australia decline.
• Retro reinsurance: $246M loss (vs. $209M) — purely deferred charge accretion.

Insurance Investment Income (after-tax: $2.68B vs. $2.89B, -7.4%)

• Pre-tax interest income fell 10.3% — the explicit reason given is lower interest rates. Dividend income essentially flat.

BNSF (after-tax: $1.38B vs. $1.21B, +13.4%)

• Volume +2.2%, revenue per car +2.8%, fuel surcharge benefit. The drivers: Ag/Energy +14.8% revenue (grain, petroleum fuels, oilseeds); Industrial +2.3% (despite housing softness hurting plastics/building products); Coal +1.1% (utility retirements offset by higher demand from elevated nat-gas prices); Consumer products flat (intl intermodal up). Operating ratio improved from 67.9% to 65.6% — fuel efficiency offset higher prices, productivity offset wage inflation.

BHE (after-tax: $1.11B vs. $1.10B, +1.5%) — composition changed dramatically

• U.S. utilities -16.1% (PacifiCorp/MEC/NV Energy): higher operating costs (vegetation management, wildfire prevention, plant maintenance, insurance, technology) and higher interest expense; less production tax credit benefit.
• Natural gas pipelines +24.2%: rate case benefits and higher LNG variable revenue from cold Q1 weather.
• Other energy -26.5%: Northern Powergrid hurt by lower UK distribution tariffs from inflation adjustments + higher interest expense.
• Real estate brokerage: still losing money; "limited availability of homes for sale and high home prices" cited.

Manufacturing, Service & Retailing (after-tax: $3.20B vs. $3.06B, +4.5%)

Manufacturing pre-tax +12.6%:

• Industrial products +22.1% (revenue +23.6% boosted by OxyChem, Bell Labs):
  • PCC +32.9% pre-tax: aerospace +9.4%, IGT +18.9%; lapping a Q1 25 fasteners-facility fire; mix improvements.
  • Lubrizol +8.1%: volume + no-repeat of restructuring; raw material inflation noted as a Q2 headwind.
  • Marmon +1.3%: mostly flat; copper spreads helped Plumbing/Electrical, Rail & Leasing weak.
  • IMC +41.9%: customers accelerating purchases (likely tariff/inflation pull-forward); Berkshire explicitly warns this won't continue.
  • OxyChem (new): small pre-tax loss in Q1 due to acquisition accounting amortization plus higher maintenance/utility/property tax/material costs.
• Building products -9.2% (revenue -2.9%): Clayton home unit sales -9.7% volumes, slow housing market. Clayton financial services up 9.6% on higher rates and balances.
• Consumer products +29.6% (revenue -1.5%): Forest River SG&A discipline, Duracell got more advanced manufacturing PTC, Brooks gains; offset by Fruit of the Loom exit of unprofitable lines and Garan/Jazwares declines.

Service & Retailing:

• Service +21.1% pre-tax ($785M vs. $648M): TTI revenue +26.2% (customers responding to "potential further price increases and supply chain concerns" — translation: tariff front-running); aviation services +11.8% on more aircraft and hours; IPS +23.7% on life sciences and data center construction.
• McLane -20.4%: retail sales down 8.0% (net customer losses); restaurant business up; lower gross margins.
• Retailing +1.0%: BHA +3.7% (service contracts) on lower vehicle sales (-4.3%); other retailers down 11.9% on "higher economic uncertainty and changes in consumer confidence."
• Pilot -129.8%: hedging losses recognized as fuel prices rose, with offsetting inventory gains deferred — a timing mismatch that should reverse.

5. Other Items Worth Flagging

• OxyChem deal closed 1/2/26 for ~$9.5B, with assets preliminarily $10.8B and liabilities $1.3B — implying ~$0 of goodwill/intangibles bargain or near-asset-value purchase price. Occidental retained legacy environmental liabilities, which is a meaningful protective term.
• OECD Pillar Two: Berkshire says it does not currently expect material impact, citing the January 2026 OECD safe harbor for U.S.-parented multinationals.
• Capex guidance: BHE + BNSF expect ~$12.4B more in capex over the rest of 2026.
• Five largest equity holdings unchanged in identity: AmEx, Apple, BAC, Coca-Cola, Chevron — but down from 65% to 61% of the equity portfolio, suggesting some diversification.
• AmEx ownership at 22.2% (151.6M shares), still above the typical 20% threshold but still not equity-method due to Fed passivity commitments.
• NICO bankruptcy/environmental settlement: $535M to bankruptcy estate pending court approval; CDESA filed 4/3/26 with EPA and state environmental agencies — these should clean up legacy non-insurance affiliate environmental exposure once approved.
• Consolidated cash + T-bills (net of payables): $373.5B at 3/31. Continues to sit near record levels even with the $9.5B OxyChem outlay.

Bottom Line

The headline "earnings doubled YoY" is largely a function of (a) no significant catastrophes vs. $1.1B+ from the So Cal wildfires in Q1 25 and (b) FX swinging from a $713M after-tax loss to a $249M gain on yen/euro debt. Underlying operating performance was mixed: GEICO's combined ratio deteriorated meaningfully, U.S. utilities are absorbing higher wildfire-related costs, the property reinsurance market is softening, and the housing complex (Clayton, building products, HomeServices, retailing) continues to struggle. The bright spots are BNSF efficiency, natural gas pipelines, PCC aerospace, and TTI.

The two most important under-the-radar items are (1) the resumption of buybacks under Abel (tiny but symbolically meaningful, and consistent with the ~1.4x P/B), and (2) the Tokio Marine 10-year quota share as a major new long-duration reinsurance relationship. The PacifiCorp Phase I reversal is the biggest post-quarter event, materially de-risking what had been one of Berkshire's largest open contingent exposures.

Thanks for posting, GFP.

 

I also always like the Berkshire analysis from iluvbabyb from shrewdm.com:

 

My summary of the 1Q results

Berkshire Hathaway reported the company’s net worth during the first quarter increased by 1.4%, or $9.8 billion, to $727.2 billion with book value equal to about $505,723 per Class A share as of 3/31/26. Berkshire boasts the largest shareholders’ equity of any U.S. company.

Net Earnings and Investment Gains
Berkshire Hathaway’s first-quarter GAAP net earnings surged to $10.1 billion, more than doubling the $4.6 billion reported a year earlier.

However, these figures remain subject to heavy volatility due to fluctuations in the market value of Berkshire's massive equity portfolio. For the quarter, the company recorded $1.2 billion in investment losses—a combination of $7.0 billion in unrealized losses offset by $5.8 billion in realized gains—representing a significant improvement over the $5.0 billion loss in the prior year period. 

As of quarter-end, Berkshire’s "Big Five" holdings accounted for approximately 61% of its total equity portfolio. Performance among these core assets was mixed: 
• Chevron led the group with a 37% spurt driven by rising oil prices.
• Coca-Cola also performed well, popping 9%.
• American Express faced a sharp 18% decline as Mr. Market swiped credit card companies lower during the quarter.
• Bank of America and Apple also saw pullbacks, dropping 11% and 7%, respectively.

Revenues and Operating Earnings
During the first quarter, Berkshire’s total revenues increased 4% to $93.7 billion and operating earnings jumped 18% to $11.3 billion, driven by gains in all business segments, notably in the company’s insurance businesses.

Insurance
Berkshire Hathaway’s insurance segment delivered a powerhouse performance in the first quarter of 2026, with underwriting earnings climbing 29% to $1.7 billion. This leap was primarily driven by a "catastrophe-free" quarter, a stark contrast to the $860 million in wildfire losses that dented results in Q1 2025. Despite the overall gain, GEICO’s pre-tax underwriting earnings fell 35% to $1.4 billion due to rising costs and a competitive landscape. Berkshire’s primary and reinsurance groups saw improved results during the quarter.

Insurance investment income slipped 7% to $2.7 billion, largely due to a lower interest rate environment affecting bond and cash yields. Berkshire's "all-important" insurance float—premiums held before claims are paid—grew by approximately $500 million during the quarter to reach $176.9 billion. Because underwriting was profitable, the cost of this massive $176.9 billion capital pool was effectively negative.

Railroad (BNSF)
BNSF’s quarterly revenue rose 5% to $6.0 billion, fueled by a 2.2% uptick in volume and a 2.8% rise in revenue per car/unit. The growth was spearheaded by a robust 12% surge in agricultural and energy shipments, while the increase in revenue per car reflected disciplined core pricing and higher fuel surcharges.

Even more impressive was the bottom line: net earnings chugged 13% higher to $1.4 billion. This outsized profit growth was driven by a 200-basis-point expansion in operating margin (reaching 34.4%), signaling that the railroad successfully converted modest volume gains into significant profitability through enhanced operational efficiency. 

BNSF still is “working on the railroad” to improve margins further as it enviously eyes Union Pacific’s 39.5% operating margin. Katie Farmer, the company’s CEO, described at the annual meeting her plan to continue to focus on operational efficiency, technological modernization and targeted capital investments.

Energy (BHE)
Berkshire Hathaway Energy delivered a 5% revenue increase to $6.7 billion in the first quarter of 2026, although net earnings growth remained muted at 1.5% ($1.1 billion). Strong performance in natural gas pipelines and federal tax credits were largely offset by continuing headwinds in U.S. utility operations.

PacifiCorp’s cumulative wildfire loss estimates reached approximately $2.9 billion by March 31, 2026, with $2.3 billion already paid. While a recent Oregon Court of Appeals ruling in April 2026 reversed and remanded a significant verdict against the company, PacifiCorp may still face material losses beyond current accruals as litigation continues.

Manufacturing
Berkshire’s Manufacturing businesses reported revenues increased 10% to $20.7 billion for the first quarter with operating earnings up 13% to $3.1 billion. 

The Industrial Products segment delivered robust results, with revenues jumping 24% to $11.2 billion and operating earnings rising 22% to $1.9 billion. While the Q1 acquisition of OxyChem provided a $1.2 billion boost to the top line, organic growth was led by IMC. Driven by accelerated customer purchasing, IMC’s revenues rose 21% to $1.2 billion, while pre-tax earnings hammered out a 42% gain. Notably, IMC’s global operations—including its significant manufacturing base in Israel—have remained resilient and unaffected by recent regional conflicts.

Building Products revenues declined 3% to $6.0 billion, with operating earnings falling 9% to $804 million. This performance was impacted by softer customer demand, driven by broader economic conditions and significant weather disruptions across parts of the U.S. during the first quarter of 2026. 

The Consumer Products segment saw a 2% revenue decline to $3.5 billion, yet operating earnings motored 30% higher to $324 million. While lower sales volumes at Fruit of the Loom, Garan, Jazwares, and Forest River pressured the top line, these were partially offset by growth at Brooks and Duracell. The significant earnings expansion was driven by expense reductions at Forest River, robust sales at Brooks, and the benefit of tax credits at Duracell.

Service and Retailing
Service and Retailing revenues increased 4% during the quarter to $34.2 billion with pre-tax earnings dropping 9% to $1.2 billion.

The Service group delivered a standout performance, with revenues rising 17% to $6.4 billion and pre-tax earnings climbing 21% to $785 million. Growth was fueled by significant gains across the portfolio, including a 26% revenue surge at electronics distributor TTI, a 24% increase at IPS (data center construction services), and 12% growth in aviation services. Profitability gains were primarily driven by TTI’s strong performance, with additional contributions from the aviation sector.

Retailing group revenues eased 2% to $4.6 billion, while pre-tax earnings edged up 1% to $296 million. The revenue decline was largely driven by a 3% contraction at Berkshire Hathaway Automotive (BHA), which accounts for approximately 70% of the group’s top line. Despite lower vehicle sales, BHA’s pre-tax earnings rose 4%, bolstered by strong service contract performance and reduced operating expenses. Conversely, the group’s other retail businesses faced headwinds from increased competition and shifting consumer confidence, resulting in a collective 12% decline in earnings.

Pilot Travel Centers’ first-quarter revenues rose 8% to $11.2 billion, bolstered by higher fuel prices. However, the company reported a pre-tax loss of $50 million, as performance was pressured by lower gross fuel margins, elevated operating expenses, and losses from hedging contracts.

McLane’s revenues declined 2% to $11.9 billion, primarily reflecting lower sales volumes following the loss of several customers. Pre-tax earnings fell 20% to $144 million, driven by compressed gross margins and rising operating expenses.

Financial Position 
As of March 31, 2026, Berkshire Hathaway maintains an exceptionally strong capital base of $727.2 billion, supported by significant liquidity. Excluding investments in railroads and energy, the company held $699.2 billion in total investments, with a heavy weighting toward cash and cash equivalents:

• Cash and Short-Term Investments: $373.5 billion (53.4% of non-operating investments).
• Equity Securities: $288.0 billion (41.1%), consisting of various marketable holdings.
• Equity Method Investments: $20.0 billion (3.0%), which includes significant stakes in:
o Kraft Heinz: 27.5% ownership.
o Occidental Petroleum: 26.9% ownership.
• Fixed-Income Investments: $17.7 billion (2.5%).

This massive liquidity position provides Berkshire with substantial "dry powder" for future acquisitions or market opportunities. 

Free Cash Flow
During the first quarter of 2026, Berkshire generated $10.4 billion in operating cash flow and invested $5.0 billion in capital expenditures, including capital expenditures of $3.2 billion by BNSF and BHE. BNSF and BHE maintain very large investments in capital assets (property, plant and equipment) and regularly make significant capital expenditures in the normal course of business. BHE and BNSF forecast capital expenditures for the remainder of 2026 of approximately $12.4 billion. Free cash flow during the quarter declined 18% to $5.4 billion, reflecting investment-related items and higher income taxes. 

During the quarter, Berkshire paid $16.0 billion to acquire equity securities and received proceeds of $24.0 billion from the sale of stocks, including the likely liquidation of many of the stocks previously managed by Todd Combs, the former investment manager who departed Berkshire. Berkshire purchased a net $1.9 billion in Treasury Bills and fixed-income investments during the quarter.

On January 2, 2026, Berkshire acquired Occidental’s chemicals business (“OxyChem”) for approximately $9.5 billion. On Feb. 15, 2026, PacifiCorp announced plans to sell part of its Washington operations for $1.9 billion in cash which is expected to close in the first half of 2027. 

Share Repurchases
Berkshire Hathaway continues to repurchase shares when market prices fall below intrinsic value, as conservatively determined by CEO Greg Abel in consultation with Chairman Warren Buffett. During March 2026, the company repurchased 33 Class A shares at an average price of $729,701 and 431,462 Class B shares at an average price of $486.92. With the stock currently trading at a discount to these latest repurchase prices, long-term investors may find this an attractive entry point to buy Berkshire Hathaway. 
 

[sleepydragon]

1 hour ago, sleepydragon said:

I am not a doctor but  this sort of disease is basically some protein that regulates the electrical signals in the brain , essentially for calming them down, are not being produced by the body. But it’s a neuro disease not a brain disease or terminal disease. So it doesn’t affect his logical reasoning . Millions of Americans living with such conditions. 

I think it might be Essential Tremor> -- I am not a doctor, not even a nurse.. just my pure guess based on I happen to be studying a biotech stock right now that make a drug for this condition.. Here is a description I get from AI about ET:

---

**Essential Tremor (ET)** is the most common movement disorder, causing rhythmic shaking (usually in the hands/arms) that worsens with action or posture.

### How people get it
- **Strong genetic component** — Often runs in families (autosomal dominant; ~50% chance if a parent has it). Multiple risk genes identified, but not one single cause.
- **Age-related** — Most common after age 40.
- Combination of genetics + possible environmental factors. Not caused by lifestyle.

### Impact on health
- **Physical** — Interferes with writing, eating, drinking, and fine tasks. Can spread to head, voice, or gait. Slowly worsens over years but is **not life-threatening**.
- **Quality of life** — Can cause embarrassment, social withdrawal, anxiety, and reduced independence.

### Impact on thinking/cognition
- Traditionally motor-only, but many patients have mild cognitive issues (memory, attention, executive function).
- **Higher risk** of mild cognitive impairment and dementia (roughly 2–3x vs. general population), especially with late-onset ET. Not everyone develops this.

ET is manageable with medications, therapy, or procedures like focused ultrasound. See a neurologist for evaluation.

 

---

[gfp]

Yeah Ingrid is great (babyb) and as an added bonus she is a real person who lives and breathes (and puns!)

 

I stopped going to that shrewdm site a while ago and forgot it still existed. 

[gfp]

Berkshire's 13F will be interesting this go round as it should make it fairly clear which positions were chosen by Todd Combs.

[73 Reds]

1 hour ago, gfp said:

 

Yes, I criticized the AI for not phrasing it as a move towards normalization of the CR and scolded it on a few other issues.  It says it will remember my corrections but I know it won't.  It won't even be the same model this time next quarter

Does any BRK shareholder but me wish that BRK would initiate its own TRS?

[MikeL]

Several questions were asked in the AGM on how Greg would manage the investment side of the business, I feel most shareholders by now feel very comfortable with Greg's capability on managing the operation side of the business, but seems not certain on the investment side.

 

Also, anyone is surprised by the low percentage of money managed by Ted, 6%?

[73 Reds]

4 minutes ago, MikeL said:

Several questions were asked in the AGM on how Greg would manage the investment side of the business, I feel most shareholders by now feel very comfortable with Greg's capability on managing the operation side of the business, but seems not certain on the investment side.

 

Also, anyone is surprised by the low percentage of money managed by Ted, 6%?

Likely to rise over time, particularly once Buffett is no longer around.  Assuming Ted stays, he almost has to become Greg's "Charlie".

Edited May 3 by 73 Reds
Line

[dealraker]

2 hours ago, sleepydragon said:

I am not a doctor but  this sort of disease is basically some protein that regulates the electrical signals in the brain , essentially for calming them down, are not being produced by the body. But it’s a neuro disease not a brain disease or terminal disease. So it doesn’t affect his logical reasoning . Millions of Americans living with such conditions. 

I have what's called (it can be called a number of things) specific task tremors.  I can raise my hands to my mouth without a glass or container without shaking whatsoever.  But when I try to drink out of a glass or any containor I'll shake the liquid out of the container most of the time- but not always- with either hand.  So if I'm with you drinking liquid you'll most often see me using both hands at the same time on a glass or bottle.  20 years of it, hasn't progressed.  The shaking only occurs at the point of trying to drink, I can get my hands up almost to my mouth without shaking but then all hell breaks loose LOL.

 

Also, most days I can not write my name legibly.  But I do not shake at all until I begin writing, until I get the pen on the paper.

 

 

Edited May 3 by dealraker

[LC]

5 minutes ago, dealraker said:

Also, most days I can not write my name legibly.  But I do not shake at all until I begin writing, until I get the pen on the paper.

 

And you're still out there on the mountain bike riding? Hell yeah!

[dealraker]

1 hour ago, Charlie said:

Thanks for posting, GFP.

 

I also always like the Berkshire analysis from iluvbabyb from shrewdm.com:

 

My summary of the 1Q results

Berkshire Hathaway reported the company’s net worth during the first quarter increased by 1.4%, or $9.8 billion, to $727.2 billion with book value equal to about $505,723 per Class A share as of 3/31/26. Berkshire boasts the largest shareholders’ equity of any U.S. company.

Net Earnings and Investment Gains
Berkshire Hathaway’s first-quarter GAAP net earnings surged to $10.1 billion, more than doubling the $4.6 billion reported a year earlier.

However, these figures remain subject to heavy volatility due to fluctuations in the market value of Berkshire's massive equity portfolio. For the quarter, the company recorded $1.2 billion in investment losses—a combination of $7.0 billion in unrealized losses offset by $5.8 billion in realized gains—representing a significant improvement over the $5.0 billion loss in the prior year period. 

As of quarter-end, Berkshire’s "Big Five" holdings accounted for approximately 61% of its total equity portfolio. Performance among these core assets was mixed: 
• Chevron led the group with a 37% spurt driven by rising oil prices.
• Coca-Cola also performed well, popping 9%.
• American Express faced a sharp 18% decline as Mr. Market swiped credit card companies lower during the quarter.
• Bank of America and Apple also saw pullbacks, dropping 11% and 7%, respectively.

Revenues and Operating Earnings
During the first quarter, Berkshire’s total revenues increased 4% to $93.7 billion and operating earnings jumped 18% to $11.3 billion, driven by gains in all business segments, notably in the company’s insurance businesses.

Insurance
Berkshire Hathaway’s insurance segment delivered a powerhouse performance in the first quarter of 2026, with underwriting earnings climbing 29% to $1.7 billion. This leap was primarily driven by a "catastrophe-free" quarter, a stark contrast to the $860 million in wildfire losses that dented results in Q1 2025. Despite the overall gain, GEICO’s pre-tax underwriting earnings fell 35% to $1.4 billion due to rising costs and a competitive landscape. Berkshire’s primary and reinsurance groups saw improved results during the quarter.

Insurance investment income slipped 7% to $2.7 billion, largely due to a lower interest rate environment affecting bond and cash yields. Berkshire's "all-important" insurance float—premiums held before claims are paid—grew by approximately $500 million during the quarter to reach $176.9 billion. Because underwriting was profitable, the cost of this massive $176.9 billion capital pool was effectively negative.

Railroad (BNSF)
BNSF’s quarterly revenue rose 5% to $6.0 billion, fueled by a 2.2% uptick in volume and a 2.8% rise in revenue per car/unit. The growth was spearheaded by a robust 12% surge in agricultural and energy shipments, while the increase in revenue per car reflected disciplined core pricing and higher fuel surcharges.

Even more impressive was the bottom line: net earnings chugged 13% higher to $1.4 billion. This outsized profit growth was driven by a 200-basis-point expansion in operating margin (reaching 34.4%), signaling that the railroad successfully converted modest volume gains into significant profitability through enhanced operational efficiency. 

BNSF still is “working on the railroad” to improve margins further as it enviously eyes Union Pacific’s 39.5% operating margin. Katie Farmer, the company’s CEO, described at the annual meeting her plan to continue to focus on operational efficiency, technological modernization and targeted capital investments.

Energy (BHE)
Berkshire Hathaway Energy delivered a 5% revenue increase to $6.7 billion in the first quarter of 2026, although net earnings growth remained muted at 1.5% ($1.1 billion). Strong performance in natural gas pipelines and federal tax credits were largely offset by continuing headwinds in U.S. utility operations.

PacifiCorp’s cumulative wildfire loss estimates reached approximately $2.9 billion by March 31, 2026, with $2.3 billion already paid. While a recent Oregon Court of Appeals ruling in April 2026 reversed and remanded a significant verdict against the company, PacifiCorp may still face material losses beyond current accruals as litigation continues.

Manufacturing
Berkshire’s Manufacturing businesses reported revenues increased 10% to $20.7 billion for the first quarter with operating earnings up 13% to $3.1 billion. 

The Industrial Products segment delivered robust results, with revenues jumping 24% to $11.2 billion and operating earnings rising 22% to $1.9 billion. While the Q1 acquisition of OxyChem provided a $1.2 billion boost to the top line, organic growth was led by IMC. Driven by accelerated customer purchasing, IMC’s revenues rose 21% to $1.2 billion, while pre-tax earnings hammered out a 42% gain. Notably, IMC’s global operations—including its significant manufacturing base in Israel—have remained resilient and unaffected by recent regional conflicts.

Building Products revenues declined 3% to $6.0 billion, with operating earnings falling 9% to $804 million. This performance was impacted by softer customer demand, driven by broader economic conditions and significant weather disruptions across parts of the U.S. during the first quarter of 2026. 

The Consumer Products segment saw a 2% revenue decline to $3.5 billion, yet operating earnings motored 30% higher to $324 million. While lower sales volumes at Fruit of the Loom, Garan, Jazwares, and Forest River pressured the top line, these were partially offset by growth at Brooks and Duracell. The significant earnings expansion was driven by expense reductions at Forest River, robust sales at Brooks, and the benefit of tax credits at Duracell.

Service and Retailing
Service and Retailing revenues increased 4% during the quarter to $34.2 billion with pre-tax earnings dropping 9% to $1.2 billion.

The Service group delivered a standout performance, with revenues rising 17% to $6.4 billion and pre-tax earnings climbing 21% to $785 million. Growth was fueled by significant gains across the portfolio, including a 26% revenue surge at electronics distributor TTI, a 24% increase at IPS (data center construction services), and 12% growth in aviation services. Profitability gains were primarily driven by TTI’s strong performance, with additional contributions from the aviation sector.

Retailing group revenues eased 2% to $4.6 billion, while pre-tax earnings edged up 1% to $296 million. The revenue decline was largely driven by a 3% contraction at Berkshire Hathaway Automotive (BHA), which accounts for approximately 70% of the group’s top line. Despite lower vehicle sales, BHA’s pre-tax earnings rose 4%, bolstered by strong service contract performance and reduced operating expenses. Conversely, the group’s other retail businesses faced headwinds from increased competition and shifting consumer confidence, resulting in a collective 12% decline in earnings.

Pilot Travel Centers’ first-quarter revenues rose 8% to $11.2 billion, bolstered by higher fuel prices. However, the company reported a pre-tax loss of $50 million, as performance was pressured by lower gross fuel margins, elevated operating expenses, and losses from hedging contracts.

McLane’s revenues declined 2% to $11.9 billion, primarily reflecting lower sales volumes following the loss of several customers. Pre-tax earnings fell 20% to $144 million, driven by compressed gross margins and rising operating expenses.

Financial Position 
As of March 31, 2026, Berkshire Hathaway maintains an exceptionally strong capital base of $727.2 billion, supported by significant liquidity. Excluding investments in railroads and energy, the company held $699.2 billion in total investments, with a heavy weighting toward cash and cash equivalents:

• Cash and Short-Term Investments: $373.5 billion (53.4% of non-operating investments).
• Equity Securities: $288.0 billion (41.1%), consisting of various marketable holdings.
• Equity Method Investments: $20.0 billion (3.0%), which includes significant stakes in:
o Kraft Heinz: 27.5% ownership.
o Occidental Petroleum: 26.9% ownership.
• Fixed-Income Investments: $17.7 billion (2.5%).

This massive liquidity position provides Berkshire with substantial "dry powder" for future acquisitions or market opportunities. 

Free Cash Flow
During the first quarter of 2026, Berkshire generated $10.4 billion in operating cash flow and invested $5.0 billion in capital expenditures, including capital expenditures of $3.2 billion by BNSF and BHE. BNSF and BHE maintain very large investments in capital assets (property, plant and equipment) and regularly make significant capital expenditures in the normal course of business. BHE and BNSF forecast capital expenditures for the remainder of 2026 of approximately $12.4 billion. Free cash flow during the quarter declined 18% to $5.4 billion, reflecting investment-related items and higher income taxes. 

During the quarter, Berkshire paid $16.0 billion to acquire equity securities and received proceeds of $24.0 billion from the sale of stocks, including the likely liquidation of many of the stocks previously managed by Todd Combs, the former investment manager who departed Berkshire. Berkshire purchased a net $1.9 billion in Treasury Bills and fixed-income investments during the quarter.

On January 2, 2026, Berkshire acquired Occidental’s chemicals business (“OxyChem”) for approximately $9.5 billion. On Feb. 15, 2026, PacifiCorp announced plans to sell part of its Washington operations for $1.9 billion in cash which is expected to close in the first half of 2027. 

Share Repurchases
Berkshire Hathaway continues to repurchase shares when market prices fall below intrinsic value, as conservatively determined by CEO Greg Abel in consultation with Chairman Warren Buffett. During March 2026, the company repurchased 33 Class A shares at an average price of $729,701 and 431,462 Class B shares at an average price of $486.92. With the stock currently trading at a discount to these latest repurchase prices, long-term investors may find this an attractive entry point to buy Berkshire Hathaway. 
 

For the record, babyb has been doing these for 30 years.  It is not AI!

[dealraker]

3 hours ago, LC said:

 

And you're still out there on the mountain bike riding? Hell yeah!

Yes LC!  And luckily I can still run trail building equipment without any issues.  I'm only good for about 2 hours at a time, but oh how I do enjoy my often, but brief, trail building encounters.  The other day I got the Cat skid steer so stuck in the mud that it took three trucks, three winches, and multiple pulleys to get that baby out.  Now that was stuck in the mud if I've ever seen it!

Edited May 3 by dealraker

[sleepydragon]

1 hour ago, sleepydragon said:

I think it might be Essential Tremor> -- I am not a doctor, not even a nurse.. just my pure guess based on I happen to be studying a biotech stock right now that make a drug for this condition.. Here is a description I get from AI about ET:

---

**Essential Tremor (ET)** is the most common movement disorder, causing rhythmic shaking (usually in the hands/arms) that worsens with action or posture.

### How people get it
- **Strong genetic component** — Often runs in families (autosomal dominant; ~50% chance if a parent has it). Multiple risk genes identified, but not one single cause.
- **Age-related** — Most common after age 40.
- Combination of genetics + possible environmental factors. Not caused by lifestyle.

### Impact on health
- **Physical** — Interferes with writing, eating, drinking, and fine tasks. Can spread to head, voice, or gait. Slowly worsens over years but is **not life-threatening**.
- **Quality of life** — Can cause embarrassment, social withdrawal, anxiety, and reduced independence.

### Impact on thinking/cognition
- Traditionally motor-only, but many patients have mild cognitive issues (memory, attention, executive function).
- **Higher risk** of mild cognitive impairment and dementia (roughly 2–3x vs. general population), especially with late-onset ET. Not everyone develops this.

ET is manageable with medications, therapy, or procedures like focused ultrasound. See a neurologist for evaluation.

 

---

essential tremor: happens when you move the hands. Visible mainly during speaking and gesturing. Not a big deal other than appearance and convenience. 

parkingson: tremoring (maining pill rolling) when hands are relaxed— just opposite to ET. Highly unlikely , actually 0 chance, cuz we have seen this for a few years now and he has Not seen declined mental state. 

[Spekulatius]

On 5/2/2026 at 11:04 AM, mengan said:

Ajit needs better fitted suit.

That was my main takeaway from the meeting as well. He minds me of late Stephen Hawkins sitting in his chair.

[Spekulatius]

4 hours ago, MikeL said:

Several questions were asked in the AGM on how Greg would manage the investment side of the business, I feel most shareholders by now feel very comfortable with Greg's capability on managing the operation side of the business, but seems not certain on the investment side.

 

Also, anyone is surprised by the low percentage of money managed by Ted, 6%?

Yes, very surprising. The percentage he manages was raised from 5% to 6% , which is small considering that the fellow managing 5% just left and WEB is technically gone too. Seems kind a of a black hole who manages  the other 94%.

[cubsfan]

4 hours ago, LC said:

 

And you're still out there on the mountain bike riding? Hell yeah!

 

Deal is indestructible.

[Eldad]

1 hour ago, Spekulatius said:

Yes, very surprising. The percentage he manages was raised from 5% to 6% , which is small considering that the fellow managing 5% just left and WEB is technically gone too. Seems kind a of a black hole who manages  the other 94%.

I mean it is pretty clear to me in the couple of Buffett interviews since “retirement” that Warren manages the other 94%. 
 

I would think post Buffett it will be Ted, Greg, and Board working in concert. I mean you have Davis and Weitz on the board. 

[Pellom]

I think Ted is more involved in the operating businesses than we know. At least in the sense that he is involved in acquisitions in that space and not solely a public securities manager.