What we read from Berkshire Hathaway Q1 earnings

9 May 2025 , 11:05 AM

WARREN BUFFETT TO STEP DOWN BY END OF 2025

When Warren Buffett hangs up his boots at the end of 2025, it would be the end of era in value investing. He has led Berkshire Hathaway for over 60 years now (Buffett is 94), and in this period has given twice the CAGR returns of the S&P 500 index. That probably sums it up. For starters, one share of Class-A Berkshire Stock is currently priced in the market $7,30,000, which is roughly equivalent to ₹6.21 Crore in Indian rupees. That surely makes it the priciest stock of all times. In the last one year, the Berkshire Class-B share (issued in 1996) has rallied 35% from $400 to $540, as reciprocal tariffs and a possible market crash are likely to offer opportunities to enter stocks. That is an interesting position to be in. In this background, Buffett will step down from the helm and hand over reins to Greg Abel.

HOW BERKSHIRE HATHAWAY PERFORMED IN Q1-2025

Operating revenues in Q1-2025 (which includes unrealized and realized gains / losses) from Berkshire’s investments and derivatives portfolios, fell 9.2% yoy to $83.3 billion. This was largely on account of $6.4 billion in investment losses and other adjustments. Most of the segments of the Berkshire Hathaway business posted strong operating earnings growth, but the losses came from significant payouts by the insurance business to compensate for the Southern California wildfires. When the investment losses and the losses of the insurance venture were taken into account, the net profits of Berkshire Hathaway for Q1-2025 fell by 63.8% to $4.6 billion. It must be noted here that Berkshire Hathaway reports its operating results after adjusting for any MTM losses to give a clear picture, although these may not eventually translate into losses for the company.

SITTING ON $348 BILLION IN CASH; AND STILL COUNTING

One of the big talking points has been the massive cash pile that Buffett has been sitting on for some time now, due to lack of deep value opportunities in the market. As of the end of December 2024, the cash pile was at $334 Billion, which has further grown to $348 Billion as of the end of March 2025. According to estimates, out of this cash stash, nearly $292 Billion is ready for investing at any point. Buffett himself has admitted that he was willing to deploy up to $100 Billion in one go, if the deep value opportunities presented. However, in this quarter, neither has Buffett added substantially to any stock, nor has Berkshire Hathaway bought back its own shares, as is the normal practice at the company.

WHAT BUFFETT THINKS ABOUT TARIFF UNCERTAINTY?

According to Warren Buffett, President Trump’s reciprocal tariff plan and his punitive tariffs on China had created an uncertain environment for several of the Berkshire businesses; including BNSF, Brooks Running, and Geico insurance. However, Buffett also admitted that at the current juncture, it was not possible to predict the outcomes of such moves. He has warned that quarterly results in 2025 could be impacted by such uncertainty, since recent actions had created a volatile macro environment. Berkshire has also stated that such tariffs and macro uncertainty could impact their product costs, supply chain costs and efficiency, and customer demand. However, at the current juncture, it was too premature to predict the possible outcome.

For now, the question is; what will Berkshire Hathaway do with the $348 Billion cash pile. The market has no answers and even Buffett does not seem too keen to stick his neck out in this volatile macro environment!