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Buffett's Firm Plans Online Event After Reporting $50B Loss
Warren Buffett planned to lead an unusual annual meeting Saturday afternoon without any of the roughly 40,000 shareholders who typically attend, but the investor did plan to offer some of the commentary that draws the huge crowds.
Berkshire Hathaway's annual meeting was to be livestreamed and include an abbreviated version of the question-and-answer session Buffett normally leads. All of the surrounding events, including a trade show where Berkshire companies sell their products, were canceled this year because of the coronavirus pandemic.
"It's going to be a strange annual meeting," said Andy Kilpatrick, a retired stockbroker who wrote a Buffett biography and has attended every annual meeting since 1985.
Instead of sitting next to business partner Charlie Munger in an arena filled with shareholders, Buffett was being joined this year by Berkshire Vice Chairman Greg Abel, who oversees all of the company's non-insurance businesses, to answer questions in front of a camera.
The two men likely were likely to be asked about the nearly $50 billion loss that Berkshire reported Saturday morning and the huge pile of cash the company is holding.
Berkshire said it lost $49.7 billion, or $30,653 per Class A share, during the first quarter. That's down from last year's profit of $21.66 billion, or $13,209 per Class A share.
Investment values sink
The biggest factor in the loss was a $54.5 billion loss on the value of Berkshire's investment portfolio as the stock market declined sharply after the coronavirus outbreak began. The year before, Berkshire's investments added $15.5 billion to the company's profits.
Buffett has long said Berkshire's operating earnings offer a better view of quarterly performance because they exclude investments and derivatives, which can vary widely. By that measure, Berkshire's operating earnings improved to $5.87 billion, or $3,617.62 per Class A share, from $5.56 billion, or $3,387.56 per Class A share.
Analysts surveyed by FactSet expected operating earnings per Class A share of $3,796.90 on average.
Berkshire's revenue grew 1 percent to $61.27 billion. The company said revenue slowed considerably in April as the virus outbreak negatively affected most of its businesses. Berkshire closed several of its retail businesses, such as See's Candy and the Nebraska Furniture Mart, this spring while BNSF railroad and its insurance and utility businesses continued operating.
Berkshire is sitting on a pile of more than $137 billion cash because Buffett has struggled to find major acquisitions for the company recently. Edward Jones analyst Jim Shanahan said it was striking that Buffett didn't find any bargains to invest in at the end of the first quarter.
"The lack of investment activity really sticks out," Shanahan said.
Berkshire Hathaway Inc. owns more than 90 companies, including the railroad and insurance, utility, furniture and jewelry businesses. The company also has major investments in such companies as Apple, American Express, Coca-Cola and Bank of America.
May 03, 2020 at 05:18AM
