Multi-billionaire Warren Buffett's investment company reported on Wednesday a huge jump in first-quarter profits, largely due to a $1.5 billion one-time gain from Capital Cities/ABC stock.
Berkshire Hathaway Inc. exchanged its 20 million shares of Capital Cities stock in March for mostly Walt Disney Co. stock and some cash when Walt Disney bought Capital Cities.The $1.5 billion investment gain reflects the difference between what Berkshire paid for the Capital Cities stock and its value at the time of the exchange.
With the exchange, Berkshire's net earnings in the three months ended March 31 jumped nearly 11 times to $1.67 billion, from $139 million in the same quarter last year.
Net earnings per share jumped to $1,398 in the first quarter of this year, up from $118 in the first quarter of 1995.
Excluding one-time investment gains and losses, Berkshire's first-quarter profits rose 11 percent to $160.2 million, from $144 million in the year-ago period.
Berkshire said the gain from its Capital Cities stock only marginally boosted Berkshire's book value in the quarter because the investment company through the years had recorded the gradual appreciation of the stock.
Berkshire also has large investments in companies including the Washington Post, Coca-Cola Co., Gillette Co. and Wells Fargo Bank.