Berkshire Hathaway, even when reflecting investment losses, "should focus on operating profit rather than quarterly net profit"

Berkshire Hathaway Inc. (BRK.A; BRK.B) said when it announced its Q1 2026 results that, compared with accounting net profit, more emphasis should be placed on the “operating profit” metric. The company explained that stock valuation gains and losses can swing sharply from quarter to quarter, and relying on just the headline figures to judge performance may lead to misunderstandings.

On the 3rd (local time), Berkshire released an overview of its Q1 2026 and Q1 2025 results via a press release. The company reminded investors and the media that “it is difficult to make fully informed investment judgments based solely on limited press release content,” and asked them to review the official 10-Q report as well.

The key point of this release is that, under U.S. accounting standards (GAAP), the “unrealized valuation gains and losses” on the stocks held will be reflected in the income statement. Accordingly, Berkshire’s investment gains and losses include an unrealized loss of about $7 billion (approximately 10.339 trillion KRW) in Q1 2026. In the same project for Q1 2025, losses of about $7.4 billion (approximately 10.9298 trillion KRW) were also reflected.

However, Berkshire also provided performance figures arising from actual investment sales. The after-tax realized gain from investment asset sales in Q1 2026 was $5.8 billion, equivalent to 8.5666 trillion KRW. The realized gain in Q1 2025 was $2.4 billion, or approximately 3.5448 trillion KRW.

The company emphasized that, because of this structure, the investment gains and losses numbers for a given quarter “may be largely meaningless.” In particular, for investors who are not familiar with accounting standards, the earnings per share figure may appear severely distorted. This is consistent with Warren Buffett’s long-standing view that, compared with fluctuations in market prices, the ability of real business operations to generate cash and profitability matter more.

Berkshire defines operating profit under non-GAAP standards as: the value obtained by excluding from net profit items such as investment gains and losses, goodwill and intangible asset impairments, and one-time impairments related to equity-method investments. The company believes that, although the structure of earning investment income through insurance and reinsurance premiums is part of the company’s operations, quarterly investment gains and losses are separate from underwriting performance.

Indicators that demonstrate financial strength have also been released. As of March 31, 2026, the number of issued shares, translated into Class A shares, was 1,437,903. In the same period, the insurance “float” totaled approximately $176.9 billion, or approximately 261.3213 trillion KRW. This was an increase of about $0.5 billion (about 738.5 billion KRW) compared with the end of 2025. Float is the money temporarily obtained through insurance contracts and is regarded as Berkshire’s core source of investment capital.

Berkshire Hathaway is a diversified conglomerate with multiple lines of business, including insurance and reinsurance, railroad transportation, utilities and energy, manufacturing, services, and retail. Its stock ticker symbols on the New York Stock Exchange are BRK.A and BRK.B.

This earnings release once again confirms Berkshire’s consistent message: focus on the strength of the core business rather than surface-level net profit. In periods like the recent one, when the financial markets are experiencing high volatility, stock valuation gains and losses can move around performance; therefore, investors need to examine “fundamental strength” indicators such as operating profit, cash generation capability, and insurance float alongside quarterly figures.

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