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Berkshire shares rise as investors cheer earnings and Geico’s recovery

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Warren Buffett tours the grounds at the Berkshire Hathaway Annual Shareholders Meeting in Omaha Nebraska.

David A. Grogan | CNBC

OMAHA, Neb. — Berkshire Hathaway shares rose on Monday as Warren Buffett’s conglomerate wooed investors with a strong earnings report and an insightful “Woodstock for Capitalists” over the weekend.

Berkshire’s B shares climbed 1.5% in premarket trading, set to add to their 5% gain so far this year. Berkshire Class A shares hit a 52-week high early last week, briefly topping $500,000.

For the first quarter, the Omaha-based conglomerate reported a 12.6% jump in operating earnings, which encompass profits made from an array of businesses, ranging from insurance to railroads, and utilities to Dairy Queen.

The strong performance was driven by a rebound in Berkshire’s insurance business, especially auto insurer Geico. Earnings also rose sharply thanks in part to gains in its equity portfolio, led by Apple

“We continue to believe BRK’s shares are an attractive play in an uncertain macro environment,” said Brian Meredith, Berkshire analyst at UBS, who also raised full-year earnings estimates following the Q1 report.

Berkshire also repurchased $4.4 billion worth of stock — the most since the first quarter of 2021 — up from $2.8 billion at the end of last year.

Geico’s surprise recovery

Geico, the crown jewel of Berkshire’s insurance empire and Buffett’s favorite child, saw a big turnaround in the quarter, returning to an underwriting profit of $703 million. The auto insurer suffered a $1.9 billion pretax underwriting loss last year as it sacrificed market share to competitor Progressive. 

Ajit Jain, Berkshire’s vice chairman of insurance operations, said Saturday that auto insurer Geico is “taking the bull by the horns” to improve the use of telematics. Geico has reached a point where about 90% of new businesses has a telematic input on pricing decisions, Jain said.

Telematics programs allow insurers to collect clients’ driving data, including their mileage and speed, to help price policies.

Best meeting in years

This year’s annual meeting drew a full house of adoring attendees in Omaha, with international travelers rising about 20% from last year. The 92-year-old “Oracle of Omaha,” along with his right-hand man, the 99-year-old Charlie Munger, fielded nearly 50 questions from shareholders.

“We viewed Berkshire’s 2023 annual meeting as the best in several years, with quality questions and insightful answers,” Meredith said.

The legendary duo commented on a variety of topics, from the banking crisis, to the state of value investing, to specific stocks they own and the threat of artificial intelligence.

“It was another master class watching hours of Buffett and Munger and a priceless education as always,” said Peter Boockvar, chief investment officer of Bleakley Financial Group.

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