Warren Buffett's Berkshire Hathaway Reports Earnings Saturday—What You Need To Know

Warren Buffett's Berkshire Hathaway (BRK.A, BRK.B) is group to study its second-quarter financial results connected Saturday. Here's a guideline to immoderate of nan cardinal metrics investors will beryllium watching for successful nan net report.

Looking At Operating Income, Not EPS

While investors typically attraction connected nett income and net per stock for astir companies, Warren Buffett's patient is simply a small different. Given nan magnitude of its investments, accounting rules for those tin skew profit figures.

"The magnitude of finance gains (losses) successful immoderate fixed 4th is usually meaningless and delivers figures for nett net per stock that tin beryllium highly misleading to investors who person small aliases nary knowledge of accounting rules," past net reports person warned.

The number to watch retired for is operating income, that according to Buffett, provides a amended image of nan wellness of nan company's businesses. At nan extremity of nan first quarter, that number stood astatine $11.2 billion, up from $8.1 cardinal a twelvemonth earlier.

Berkshire's Cash Pile successful Focus

Berkshire had a monolithic stockpile of astir $189 cardinal successful rate and different short-term investments arsenic of nan extremity of March, pinch astir of it parked successful short-term U.S. Treasurys. Investors will undoubtedly beryllium looking to spot really Berkshire has spent from that reserve, aliases if it has continued to clasp aliases adhd to it.

Berkshire has besides historically utilized its rate to prosecute successful stock buyback programs. Buffett has reduced nan number of outstanding shares by astatine slightest 10% by spending billions to bargain backmost stock.

The institution has besides expanded its portfolio by acquiring business, buying nan remaining 20% liking successful Pilot Travel Centers earlier this twelvemonth aft building up its position complete a months-long period.

However, Berkshire whitethorn calibrate nan complaint astatine which it invests successful caller businesses, having antecedently cited a deficiency of bully candidates. In nan 2023 yearly missive released successful February, Buffett said that location were “only a fistful of companies” successful nan U.S. that could fresh nan company's finance criteria and that location were "essentially nary candidates," among different geographies.

Clues To Portfolio Changes?

After keeping it a concealed since precocious past year, Berkshire revealed an finance successful Chubb (CB) successful May, sending nan insurer's shares soaring. Chubb shares person gained astir 8% since nan announcement.

But that wasn't nan only astonishment coming retired of Berkshire's portfolio. Buffett, who is celebrated for buying and holding companies for extended periods of time, pared his stake successful Apple (AAPL)—selling astir 116 cardinal shares from its largest equity position by nan extremity of nan first quarter.

Recently, shares of Bank of America (BAC) person been connected nan chopping block. Buffett began to unload its shares successful nan slope opening July 17, nan first clip Berkshire has reduced its position successful nan slope since 2019.

Still, Berkshire retains a ample liking successful Bank of America. After reducing its liking by 71.2 cardinal shares worthy roughly $3 billion successful nan past month, Berkshire owns much than 961 cardinal shares. That leaves Bank of America Berkshire's second-largest holding aft Apple.

While July is extracurricular nan Q2 net study period, investors will apt look for clues regarding immoderate noteworthy trading activity successful this net report.

Insurance Business Flourishing

Investors will besides apt beryllium watching for updates connected Berkshire's thriving security segment, its largest driver of gross and net earlier taxes. Its businesses see GEICO, Central States Indemnity, MLMIC Insurance, United States Liability Insurance Group, and respective different security companies.

"We expect much muted maturation astatine GEICO to beryllium offset by an acceleration successful maturation astatine Berkshire’s reinsurance units," said CFRA Research expert Catherine Seifert successful caller note.

Seifert suggested nan tide could move for GEICO and reinsurer margins arsenic claims costs and catastrophe claims ease, anticipating nan company's security and reinsurance businesses, on pinch acquisitions, could boost results this year.

Berkshire Hathaway's Class B shares have gained complete 21% since nan commencement of nan year, astatine $431.81 arsenic of Thursday's close.