Andrew Bary

Wall Street will be focused on more than Berkshire Hathaway's earnings when the company reports first-quarter financial results on Saturday.

There likely will be attention on Berkshire's stock repurchase activity -- or more likely the lack thereof. Investors also will be keenly interested in whether CEO Warren Buffett invested a chunk of the company's $300-plus billion of cash in stocks during the first quarter.

Berkshire's operating earnings after taxes are expected to be down 7% to $7,213 per class A share in the first quarter. The profits likely will be dampened by losses from the Los Angeles wildfires that the company preliminarily estimated at $1.3 billion before taxes.

The dollar's weakness against the yen and Euro also should result in non-cash currency losses that could total about $500 million after taxes. Berkshire has about $13 billion of yen debt, as well as $5 billion of Euro-denominated debt. When the dollar declines, it results in a higher liability that depresses reported earnings based on the complexities of earnings calculations under generally accepted accounting principles.

Berkshire's class A stock, at around $799,000, is within a percentage point of its recent record and has topped the S&P 500 index by a wide margin this year, gaining 16% against a 6% decline in the index. Investors have gravitated to Berkshire as a safe haven during a rocky period for stocks.

The analyst consensus has often understated Berkshire's earnings.

UBS analyst Brian Meredith has an above-consensus first quarter estimate of $7,342 per class A share.

He wrote in recent client note that Berkshire's Geico auto insurance unit -- probably the most important business within the company's huge property and casualty insurance franchise -- could show growth in auto policies in force on a year-over-year basis for the first time in 12 quarters. Geico has restored substantial profitability over the past two years and is spending more on marketing in an apparent effort to grow after losing about 15% of its auto policies over the past 5 years.

Berkshire hasn't bought back any stock since May 2024, based on figures through early March, and no buybacks are expected to have occurred for the rest of the first quarter. Buffett, who oversees the repurchase program, is price-conscious and Berkshire stock is now at its richest level based on book value in more than a decade. The stock's price/earnings ratio of about 25, based on 2025 projected profits, also is high by the standards of recent years.

Berkshire ended 2024 with over $300 billion of cash -- and many investors would like to see Buffett invest a chunk of that in the stock market after selling a net $134 billion last year, mostly Apple. The Berkshire 10-Q, which is slated to be released on Saturday, will include data on equity purchases and sales in the first quarter. Buffett also likely will address the topic at the Berkshire annual meeting Saturday.

The company's book value is expected to have risen slightly in the first quarter, with Meredith projecting book at just under $460,000 per class A share, up from $452,000 at year-end 2024.

The Berkshire shareholder equity was depressed by a drop in Apple stock during the first quarter, with Berkshire holding 300 million shares at year-end 2024. That will be offset by earnings, which add to shareholder equity.

The 10-Q also will show if Berkshire kept the Apple stake at 300 million shares, as well as Berkshire's holding in Bank of America, Coca-Cola, and American Express on March 31.

Write to Andrew Bary at andrew.bary@barrons.com

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April 30, 2025 01:00 ET (05:00 GMT)

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