The business conglomerate Berkshire Hathaway Inc. (BRK.A, Financial) (BRK.B, Financial) marks the 50 years of billionaire business tycoon, Warren Buffett, at its helm. But the conglomerate has other reasons to celebrate as well. The Delaware-based business house earned $5.16 billion, or $3,143 per Class A share, in the first three months of the financial year 2015. These figures are up from earnings of $4.71 billion or $2,862 per share, from the first three months of 2014. Adjusted for one off expenses, the company made $2,583 in operating earnings per share. This marks a 20% increase from earnings posted last year which stood at $2,149 per share.
Analysts had predicted operating earnings per share of $2,373 per Class A share.
Total operating earnings increased from $3.53 billion in the first quarter of 2014 to $4.24 in Q1 of 2015.
About Berkshire
The holding company owns various subsidiaries engaged in businesses ranging from primary basis and reinsurance companies; freight rail transportation; utility companies; energy generation and distribution companies. Most of these subsidiaries performed well in the first quarter of this year, posting a revenue growth of 7% to total in at $48.6 billion.
The company’s railway network suffered some losses last year but did a commendable rebound this year to earn $1.045 billion in net income. This figure is up from last year’s net income performance of $724 billion. Coupled with utilities and energy, business earnings from the three subsidiaries saw a 24.6% rise to $1.466 billion.
Berkshire’s core insurance business, including General Re re-insurers, Berkshire Hathaway Reinsurance Group and auto insurer Geico, saw a 4% rise to $480 million.
Floating in money
Insurance businesses earn the company billions of dollars in float, upfront premium paid by customers. Mr Buffett has invested this float towards expanding Berkshire's business interests. Earnings made from investing this float money in assets, grew 22% to $875 million. The underwriting profits, what remains of premiums paid to the company after expenses and losses, saw a corresponding rise from $461 million a year ago to $480 million this year.
Berkshire holds approximately $64 billion in cash at the end of the quarter ended March 31, 2015.
Share price fluctuations
Since Warren Buffett took over the affairs at Berkshire, the market value in terms of per-share price has leaped by over 1,800,000%. Many credit this to his strategy of outright acquisition instead of investing in shares and securities of businesses. In the first quarter, for example, Berkshire acquired automotive dealers Van Tuyl Group for $4.1 billion. Book value, Buffett’s preferred mode of measuring the net worth of a company, for Berkshire has grown by 0.5% since end of last year. It represents the assets minus liabilities worth of a business and currently, stands at $146,963 per Class A share.
The business holding company’s shares rose 28% last year, while seeing a 4.5% downturn in 2015 already. The 52 week High/Low stands at $229,374 / $185,005. Class A common stock was up by 0.63%, during trading hours on Friday, to close at $214748.36 each. Analysts, Barclays Capita, Edward Jones and Keefe Bruyette, polled by Zacks Investment Research, give the company’s Class A shares, predominantly, a "Hold" Rating.
