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it is time to talk about berkshire hathaway company ticker symbol b r k dot b there's also the b r k dot a shares this is of course warren buffett's company the oracle of omaha held his annual meeting yesterday and we got a detail into the company we'll take a look at all the assets the different business units that they break out obviously they own wholly kind of an insurance businesses you also have the railroads and utilities and energy business that they own 100 but obviously when we're talking about warren buffett's company as well they own large stakes in other public companies like american express apple bank of america chevron and obviously coca-cola as well we'll see how those have been developing over the last couple of months has warren buffett been buying the dip obviously when we look at stock markets a lot of stocks are down has warren buffett stepped in there and buy the dip we'll find that out on today's show and then we'll quite frankly these shelters have held up very nicely over the last year up 17 year-to-date even more impressive up seven percent when you have a lot of stocks down 20 30 percent even high quality stocks are down berkshire hathaway has been holding up we'll look at some of the reasons why on today's video now they held their annual meeting yesterday and warren buffett has been buying the dip and buying the dip he has been okay he invested over 40 billion dollars just in three weeks in q1 warren buffett not always perfect with his timing in fact i'd always say he's maybe a little bit early on his buying but this can be a very very good sign as we move into q2 q3 q4 if warren buffett is seeing signs and reasons why he's going to unload a lot of his capital into this market could be a sign that a bottom is not necessarily around the corner but it obviously will be there at some point warren buffett stepping in certainly leading to some confidence in that now i thought what was his interesting stake in activision he's playing kind of an arbitrage play here look at this beautiful rolex president that he has on right here boy those will look fantastic if you ever have the money to buy one of these i highly recommend it but we talk about his activision stake now he's not buying activision because he's trying to take it away from microsoft or he thinks the deal will not go through he actually is just playing an arbitrage spread on this one activision shares are currently at 75 dollars per share microsoft obviously agreed to buy activision for 95 per share so he's thinking this deal will likely close he said that look if the deal goes through they'll make some money but if the deal falls apart they'll lose some money if this deal falls apart i think he'll lose some money it won't be a lot remember there's a three billion dollar breakup fee so if this deal falls apart between microsoft and activision it can fall apart for any number of different reasons primarily kind of the regulatory environment that we're in they could block this deal well microsoft actually has to pay a three billion dollar breakup fee on this one and look activision has about a 60 billion dollar market cap three billion dollars is actually a lot of money okay to anybody but especially a company like this and if this stock tanks will definitely come back here on the channel and talk about look can you step in here can you make an argument that the baby kind of got thrown out with the bathwater if this deal falls apart obviously warren buffett is hoping this deal falls through he makes about 20 to 30 per share and relatively easy and over a short period of time that this is a strat it's not a strategy that i take but it's certainly there's strategies out there if you look for like arbitrage trades obviously there's this set up right now in atvi there's also a pretty big delta in twitter as well based on the closing price today and where elon musk has agreed to buy that stock obviously there's a delta there people that that's what some people do it's not a trade i do but it is out there and obviously warren buffett does it so clearly a viable strategy if that's something that you want to do now in terms of the financials over the company we do see the evidence of the 40 billion that they spent here's investment in equity securities that's over 40 billion dollars in just about a three month time frame this guy is not i wouldn't say he's unloading the clip but boy he's unloaded at least a magazine or two and he's got a few left if he wants to continue to buy the dip now in terms of his core business i really thought what was interesting about these businesses i'll show you here so here's our insurance and other this is primarily geico you went from 53 billion last year up to 58 again a relatively steady business right okay so you grew this by about five billion on that top line i want to come down to the insurance costs so here's our costs and expenses here's our insurance line well look at our costs they actually grew by almost the identical amount they went from 47 up to about 53.
that's another five to six billion so despite the revenue growth on the insurance businesses our cost grew almost equally there as well and then we take a look the do the same thing for railroads our total revenues on the railroad side went from 11.3 up to about 11.9 again about 600 million dollars worth of additional revenue year over year just a steady kind of chugging down the track type business look at that you did 11.3 last year this year 11.9 just your steady railroad business that's what warren buffett loves but notice down here on our total expenses in the railroad segment well those also went up by about five to 600 million so we actually didn't really generate a whole lot of new profits from these business segments obviously i think a lot of that has to do with inflation the longer inflation stays in place obviously you'll likely see some price increases across the board if it happens to go away well these numbers will start to kind of normalize at least on that cost side and the revenues will likely continue to move up as well they lost a lot of money on their investments in their derivative contracts this is essentially the equity investments that they own last year they made 5.7 billion this year they lost 1.9 billion so here you should be able to figure this out their revenues in their core businesses grew almost identically to their cost and they didn't get a benefit of a 5.7 billion dollar investment gain this year it was a two billion dollar loss so if you come all the way down to net earnings yeah you guessed it they're going to be down and down quite a bit year over year from 11.8 billion down to this 5.5 again primarily driven by the fact that they did not have investment gains this quarter in fact they lost money they lost 2 billion and on top of that their core businesses didn't really generate any profit despite the increases in revenue that is key certainly going forward when we look at this company now in terms of cash flow maybe it paints a little bit different story okay you have a big depreciation and amortization on something like a railroad and things like that well you have a 2.7 billion dollar charge in the most recent quarter so we pulled down the net earnings of 5.5 again we talked about how last year we were at 11.8 primarily due to the fact that you had big investment gains well you get to subtract those in and add those back in so in the most recent quarter it still paints a story that the companies do not doing quite as well as it was in the first quarter of last year because you had 9.3 million dollars with a positive cash flow last year this year you're down to 6.8 again some of this can be explained by maybe supply chain you certainly have inflation and those types of things the railroad business energy all those types of things not immune to any type of inflationary environment all things being considered not a bad quarter just something to keep in mind that this company did contract a little bit year over year i noticed that warren buffett did not buy back any of his stock in the most recent quarter as well which i thought was interesting certainly when you come over here and look at the stock chart the stock chart during q1 was just going up and so he obviously felt like maybe there were better times to buy in later times now finally we get to warren buffett's equity investments and we see here year over year he's done a nice job obviously just continuing to hold his investments and we actually saw him add to it considerably over the last three months notice back in december basically the first of the year he had 104 billion dollars worth of equity investments primarily in american express apple bank of america and coca-cola and that has gone from 104 up to 145 so again another about 40 billion dollars in terms of that cost basis so he's added 40 billion dollars to those positions the only thing that i note is chevron has been performing quite well and so it's actually kind of overtaken the coca-cola company in terms of his kind of top four investments my guess is coca-cola's right there behind chevron right there probably his fifth place investment but we see he has just these massive gains and this should really give you hope as investors is if you have that buy and hold mentality and you do a lot of research and you have a methodology and you have patience and discipline when i think of warren buffett i think of patience and i think of discipline he's not in there immediately buying every dip he's not buying every company he concentrates around certain business segments and business units that he likes and he has experience in and he has a track record of success well he buys and holds those and look at this on his cost basis of 145 billion he has net unrealized gains of just 245 billion i say just that is just absolutely incredible so he has fair value on a 145 billion dollars worth of cost the fair value on that is over 390 billion dollars that should really reinforce that yes we are buying and holding long-term companies yes there are bearish times yes it's okay to pull back yes you can have quarters where you don't buy stocks yes you can go a year or two without going buying stocks in fact this is the biggest move that i've seen warren buffett make into equities in a long time and that is just another example of why being patient and disciplined at the same time can really really pay off now obviously buying and holding this stock can be tremendous now the stock is still i mean it's made all kinds of like little uptrends and downtrends and sideways i've got a couple of green boxes as this stock is kind of pulling back it was up here much higher back in march up here about 360 dollars per share like a lot of stocks it's kind of given that back a little bit over the last couple of months we've pulled into an area of sideways consolidation between about 300 and about where the stock is right now 320.
if you like this stocks you like what's got going on over at this business well this is an area where i think you can buy this stock the other area which i think is even better is if you pull down we have a bigger market pullback there's a much longer sideways consolidation that this stock made for a long period of time nearly six months that's down here from about i'd call it about 270 up to 290.
anywhere south of 300 i do like this stock that's also an area where warren buffett has kind of bought back the shares that also could be your indicator when warren buffett is buying back his own shares that's probably a pretty darn good time to buy the stock as well in the most recent quarter doesn't appear that he did that he was much more aggressive in the general equity markets themselves this goes without saying that this is an absolutely fantastically run company there's probably some downside risk when mr buffett happens to pass away obviously nobody's hoping for that and hoping that it doesn't come anytime soon he may have to step away from the company at some point considering how old he has gotten but all things being considered the portfolio of the business and the methodology and the inspiration that warren buffett has provided for the company we would assume any kind of big weakness in a stock like this they have such great core assets and large investments in really really great companies as well this is a fantastic company to own over the long term and full disclosure in my son's portfolio they all own a small amount of this hopefully you guys enjoy today's video be back again soon with more good luck with your investments
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