Thumps up to Apple while Crypto was knocked down – Key Highlights of the Berkshire AGM

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Australian Economy, Macro Economics

Berkshire Hathaway Inc. (NYSE: BRK.A) is a multi-national conglomerate company which includes businesses like Insurance, such as GEICO, Berkshire Hathaway Primary Group, General Re Corporation and Berkshire Hathaway Reinsurance Group; and Burlington Northern Santa Fe, LLC, which operates railroad system.

Berkshire released its quarterly earnings lately, and the company posted a net loss because of a new accounting rule that requires them to incorporate unrealized gains and losses from stock investments into net income. But operating income increased 49 percent as the insurance units posted a profit this quarter. That’s a good sign for those businesses after a rough 2017 wherein natural disasters led to the first annual underwriting loss in more than a decade.

On the other hand, the group held its Annual General Meeting (AGM) in Omaha, Nebraska, and the main takeaways from this year’s AGM touched upon succession plan, stake in Wells Fargo and Apple, and trade with China.

Talking about planning succession: Warren Buffett has built Berkshire Hathaway into a behemoth in his five decades running the company, but he’s now 87 years’ old and Berkshire watchers are always searching for hints about who might be next in line to run a conglomerate that now includes insurers, electric utility companies, and even a railroad entity. News in January when Buffett named Gregory Abel and Ajit Jain as vice chairmen in a ‘movement towards succession’, the shareholders got a bit of a hint about Buffett’s approach on the matter. The company has also named many women during the process of management changes over the years to promote gender equality, which of course is a different topic touched during the AGM.

On Wells Fargo and Apple: The value of Berkshire’s stake in Wells Fargo fell to $25.2 billion in the first quarter from $29.3 billion as of December 31, reflecting a 14% drop in the bank’s stock during the period. In February, the scandal-ridden lender was hit with a Federal Reserve asset growth ban until it proved it is addressing the outlined shortcomings. Wells Fargo had agreed to pay $480m to settle a class-action lawsuit from the US bank’s shareholders over its fake account scandal. On the other hand, the group has increased its stake in Apple and Buffet stated that Apple’s move of repurchasing shares is a positive one and this will help Berkshire from investment standpoint. Meanwhile, Cryptocurrencies were stated to come to bad endings, which has discouraged many as lately we saw Goldman Sachs supporting the continual momentum in Bitcoin.

Opinions on trade: Mr. Buffett said he strongly believes that the two nations, United States and China have a lot of common interests to look at, and despite the tensions the two economic powerhouses can gain a lot by working together.

The meeting went on to announce the big deal of Precision Castparts, last mega acquisition which costed $32 Billion.

All in all, shareholders of the company along with the analysts did not repent attending the AGM as opposed to what was lately witnessed during Tesla’s earnings call.


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