Berkshire Hathaway is an investment company founded and led by one of the most legendary investors of all time - Warren Buffett. Over the past decades, the firm has delivered excellent and very consistent results. Its performance was particularly impressive during prolonged bear markets, such as the 2022–2023 downturn.
However, due to his advanced age, Warren Buffett had to step down as chief manager, handing the role to Greg Abel. The company published its first results under the leadership of the new CEO.
Financial metrics:
- Revenue: up more than 4% year over year to USD 93.7 billion.
- Operating profit: up 17% year over year to USD 11.35 billion.
- Net income attributable to shareholders: up nearly 120% to USD 10.1 billion.
- Share buybacks: USD 234 million.
- Cash: another record at USD 373.5 billion.
In terms of metrics and growth, the company continues to operate exceptionally well, slightly beating market consensus expectations. Despite Warren Buffett’s legendary status, the new CEO is also not in the spotlight.
What fuels the most debate around the company is its behavior relative to the broader market and its enormous cash position. Over the long term, Berkshire has outperformed the S&P 500 by a wide margin; however, in recent quarters the fund has clearly lagged the broader market - by around 12% versus the benchmark index.
This is particularly controversial given the huge cash pile. In previous market cycles, a high cash balance at the company signaled that it was waiting for the right moment to make large (ultimately very profitable) purchases. This sentiment regarding the company’s approach has been visible for quite some time, and the further the S&P 500 pulls ahead of Berkshire’s returns, the more questions market participants begin to ask.
That view of the fund may be fundamentally misguided. Berkshire is an investment company with a fundamentally different profile than today’s S&P 500, which is dominated by technology firms.
Warren Buffett’s genius came from his exceptional ability to generate growth during periods when market sentiment was negative. Berkshire prioritizes protecting investors’ capital first, and only then seeks to generate above-normal returns.
In recent quarters, however, the market appears to have remained in a mode of unwavering euphoria, almost entirely concentrated in technology stocks. Funds such as Berkshire cannot consistently beat broad-market returns, because doing so would require an unacceptable level of risk.
BRKA.US (D1)
On the chart, one can observe the EMA200 and EMA100 crossover from above for the first time since 2022. Historically, such behavior—contrary to traditional technical analysis—has preceded long-lasting growth periods. Will it be the same this time? Source: xStation5
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