Buffett invests big chunk of Berkshire Hathaway's cash

Berkshire Hathaway’s first-quarter earnings fell more than 53% on a large swing on the paper value of its investments, but Warren Buffett found some ways to put the company’s massive cash pile to work

Berkshire Hathaway's first-quarter earnings fell more than 53% on a large swing on the paper value of its investments, but Warren Buffett found ways to put some of the company's massive cash pile to work, which will give shareholders something to talk about at Saturday's annual meeting.

Berkshire said it earned $5.46 billion, or $3.702 per Class A share, during the quarter. That’s down from $11.7 billion, or $7.638 per Class A share, a year ago.

But the key change during the quarter was that Berkshire's mountain of cash shrank to $106 billion from $147 billion at the beginning of the year as it invested $51 billion in equities. Buffett also spent $3.2 billion repurchasing Berkshire stock.

During the first quarter, Buffett agreed to buy the Alleghany insurance conglomerate for $11.6 billion and made multibillion-dollar investments in HP Inc. and Occidental Petroleum. However, he hasn't disclosed all of his stock purchases yet, so it's not immediately clear what else Berkshire invested in this year

But Berkshire did say that its stake in oil giant Chevron ballooned to $26 billion by the end of the quarter, up from $4.5 billion at the beginning of the year. Edward Jones analyst Jim Shanahan said that with the Chevron and Occidental investments combined Berkshire now has more than $40 billion invested in the oil sector.

But Berkshire said the value of its investments shrunk by $1.58 billion in the first quarter when a year ago that paper estimate of its investments grew by $4.7 billion. That accounted for most of the swing in net earnings.

Buffett says that Berkshire's operating earnings are a better measure of the company's performance because they exclude investment gains and losses. By that measure, Berkshire's earnings remained steady at $7.04 billion, or $4,773.84 per Class A share, up from $7.018 billion, or $4,577.10 per Class A share, a year ago.

That beat Wall Street expectations. The four analysts surveyed by FactSet expected Berkshire to report operating earnings of $4,277.66 per Class A share.

Berkshire said Saturday that profits improved at most of its businesses, including the railroad, utilities and manufacturing companies it owns, but underwriting income fell at its insurance companies.

In addition to investments, Berkshire Hathaway owns more than 90 business outright, including BNSF railroad, several major utilities, Geico insurance and an assortment of manufacturing and retail companies. Tens of thousands of shareholders were packing into an Omaha arena not far from the company's headquarters Saturday to listen to Buffett and Berkshire's vice chairmen spend hours answering any and all questions.