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Berkshire Hathaway Shows a Rebound From the Pandemic

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Berkshire Hathaway, the Warren E. Buffett-led conglomerate, posted net income of $ 11.7 billion in the first quarter on Saturday and made a gain on a loss of $ 49.7 billion a year ago as the paper value its investment income increased.

Using Berkshire’s preferred financial metric, operating income, the company grew nearly 19 percent year over year as its numerous subsidiaries – from power generation to the Burlington Northern Santa Fe Railroad to consumer brands – improved their performance.

The earnings report came hours before Berkshire’s annual investor meeting. Climate change and Berkshire’s response to market volatility from the March 2020 pandemic were among the topics shareholders were asked about on Saturday.

When a shareholder asked why Mr. Buffett had recommended no to two climate change proxy initiatives, he said it was “stupid, frankly” to do anything else. He said Berkshire had more than a million shareholders, and only three of them had bothered to write to him about their environmental concerns.

“For the most part, the people who bought Berkshire with their own money voted against this policy,” he said. “The votes for it came from people who have never put a penny of their own money in Berkshire. And I don’t think they read our annual reports. I don’t think you read the Berkshire Hathaway Energy reports. “If they did, they would know that Berkshire is making headway in areas like high voltage transmission and railroads.

“They are nice people, but they want us to answer a number of questionnaires their own way,” he said, adding that Berkshire would meet any government mandate on climate change.

“We will do whatever it takes,” he said.

When another shareholder asked why Berkshire sold its airline shares “at rock bottom” last year after the government announced it would not fail such companies, Buffett agreed that providing emergency aid to large corporations was a good one public policy was “That he wished” could go to every restaurant and dry cleaner and every small business that really has no business left “last year.”

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April 30, 2021, 7:16 p.m. ET

“I don’t think selling these stocks is a great moment in our history,” he added.

The annual Berkshire Investors’ Meeting for decades has drawn Mr. Buffett’s loyal supporters to the company’s hometown, Omaha, Neb., To celebrate one of the world’s most famous investors.

However, this year it was held virtually again to bow to the pandemic and collect restrictions. And for the first time, it wasn’t in Omaha, but in Los Angeles, where Charles T. Munger, Berkshire’s 97-year-old vice chairman, lives.

Annual meetings in Berkshire are known for providing a forum for the company’s shareholders to ask 90-year-old Mr. Buffett for their thoughts.

The topics expected again this year were multi-year issues such as politics, potential takeover targets for Berkshire, and who would succeed him as CEO once he decided to step down. Questions have also been raised about how the conglomerate’s stock performance can be improved – it has outpaced the S&P 500 for the past five years.

Among the companies in Berkshire that saw the biggest improvements in the first quarter was the railroad, which benefited from higher freight volumes as the American economy recovered from the pandemic. Berkshire’s construction products and consumer subsidiaries also saw higher sales as home construction and retail purchases increased.

However, other parts of Mr. Buffett’s empire continued to suffer, particularly industrial manufacturers like Precision Castparts, whose aerospace parts were less in demand due to the decline in travel associated with Covid.

Berkshire’s extensive insurance business painted a mixed picture. Geico auto insurance claims declined in the quarter, although other parts of the insurance business were impacted by increased claims related to the devastating North American winter storm in February.

Berkshire posted capital gains of $ 2.8 billion for the quarter, compared to losses of $ 54.5 billion in the 2020 quarter.

The conglomerate also repurchased $ 6.6 billion in shares during the quarter as Mr Buffett continues to spend his company’s enormous cash supply – currently more than $ 145 billion – on buying back Berkshire stocks rather than making large acquisitions to do.

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Robert Dunfee