10 Highlights of Berkshire Hathaway’s 2020 First Quarter Earnings Report

Berkshire Hathaway released its first quarter (March 31) earnings report for 2020 today.

The highlights are:

(1) Operating earnings up 6%

(2) Cash increased to $137 billion from $128 billion on December 31, 2019.

(3) Net purchase of $1.8 billion of stocks

(4) Repurchased $1.7 billion of its own stock (vs. $2.2 billion in fourth quarter 2019)

(5) Equity portfolio on March 31 equaled $181 billion. (Equity portfolio = 57% of equity portfolio plus cash).

(6) After-tax realized gains on sales of investments $965 million.

(7) Berkshire price ($273,975 on May 1) to book value ($231,214 on March 31) equals 1.18. But since market and portfolio higher May 1 vs. March 31, price to book value probably about 1.1, below previous buyback target of 1.2 and average of 1.4 in recent years.

(8) Most businesses negatively affected by Covid-19 “with the effects to date ranging from relatively minor to severe.” (Note: Covid-19 is mentioned 30 times in earnings report.)

(9) Net income of -$49.7 billion was the result of including $55.5 billion in unrealized losses on Berkshire’s portfolio.  (Warren Buffett has advised shareholders to focus on operating earnings as the appropriate measure of Berkshire’s performance.)

(10) The increase in operating earnings resulted primarily from “insurance-investment income”.