Warren’s Berkshire Hathaway Reports Earnings & Prepares For Tougher Market

May 10, 2023

2 min read

Warren Buffett warns investors to prepare for a gloomy economy and lower earnings for a majority of businesses.

In the meantime, Berkshire Hathaway (BRK.B) reported strong Q1 results ($35.5B in profits, $4.4B in buybacks, and the selling of $13.3B in stocks) but faces headwinds such as struggling insurance arm GEICO and impacts from the banking crisis.

Buy Arguments:

Buffett’s warning of a gloomy economy and impending downturn means investing in diversified and stable stocks, like Berkshire Hathaway, is crucial for portfolio protection.
Berkshire Hathaway’s strong first-quarter results, including $35.5B in profits and $4.4B in buybacks, and diversification across various sectors make it an attractive buy option.
With a focus on long-term gains, investing in value and blue-chip stocks like those in Berkshire’s top holdings, including Apple, Bank of America, and Coca-Cola, can provide consistent and profitable returns.

Sell Arguments:

Berkshire Hathaway faces headwinds in sectors including insurance and rail transportation, as well as a banking crisis that has forced Buffett to offload some long-time bank stock holdings.
Although Berkshire Hathaway is diversified, its concentration risk in Apple, worth over $151B or ~23% of its market cap, poses a risk to investors.
Berkshire Hathaway’s premium valuation, as evidenced by its P/E Non-GAAP (fwd) metric, may make it an unattractive buy option for some investors.

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