Warren Buffett's Berkshire gets more cautious on stocks and buybacks

Warren Buffett’s capital-deployment machine pulled back on several fronts at the start of the year as the billionaire took a more cautious stance on stocks.
 

Berkshire Hathaway Inc.’s net stock sales in the first quarter were the second-highest in almost five years and the conglomerate, where the billionaire is chief executive officer, slowed its buyback pace, according to a regulatory filing Saturday. That helped push Berkshire’s cash pile up 5.2% from three months earlier to a near-record $145.4 billion at the end of March.

Buffett has struggled in recent years to keep up with Berkshire’s ever-gushing cash flow. That’s led him to repurchase significant amounts of Berkshire stock, pulling a lever for capital deployment that he had previously avoided in favor of big acquisitions or stock purchases. He set a record in the third quarter of last year, snapping up $9 billion of stocks, but slowed that pace during the first quarter with repurchases of $6.6 billion.

Still, Berkshire’s businesses pulled off a strong quarter, with earnings reaching the second-highest level in data going back to 2010. Operating profit of about $7.02 billion was only surpassed by the third quarter of 2019. The gains were partly fueled by the firm’s insurers and its group of manufacturers, servicing businesses and retailers.

Net earnings, which reflect Berkshire’s $282 billion equity portfolio, swung to a profit of $11.7 billion in the quarter, compared to a loss of $49.7 billion a year earlier, when the pandemic started to race across the U.S. and stocks slumped.

Despite buybacks that fell short of Buffett’s quarterly record, the billionaire investor has continued to go after Berkshire’s own stock since the end of March, with at least $1.25 billion of repurchases through April 22, according to the filing.

Berkshire Class A shares climbed almost 11% in the first quarter, outpacing the 5.8% gain in the S&P 500 during the same time.

Buffett, 90, will join his longtime business partner, Charlie Munger, 97, for Berkshire’s annual meeting Saturday. The pair will field questions from investors for hours during the virtual event.