The Daily Chase: Berkshire Hathaway blows past expectations

Here are five things you need to know this morning.

Berkshire’s blowout year: The US$1 trillion club could be poised to get a new member this week as earnings from Berkshire Hathaway are pushing shares in the conglomerate to within striking distance of the mark. Warren Buffett’s company posted financial results over the weekend, and the numbers were “eye-popping,” as the Oracle of Omaha himself described them. The conglomerate’s operating earnings rose to $8.48 billion last quarter, up from $6.63 billion in the same period a year ago. The company’s cash hoard ballooned to a $167.6 billion and seems set to stay there for a while, as the dividend-averse Buffett warns that it’s getting harder and harder for the company to find undervalued stocks to put that cash to work in. “There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others,” Buffett wrote in his annual letter to shareholders. Berkshire’s market cap was worth just north of $900 billion on Friday, and the numbers released over the weekend are pushing the shares up about five per cent in premarket trading on Monday. Tack that on to the 4,384,748 per cent return that Buffett shareholders have gotten since he took over a failing Omaha-based textile business called Berkshire Hathaway in 1965.

Cargojet swings to big loss: There are more signs of trouble in Canada’s aviation sector on Monday as Cargojet posted quarterly financial results that mostly missed expectations. The company, which operates a fleet of 41 cargo planes, said revenues for the three month period came in at $221.9 million. That’s down from $271 million the same time last year, and below analyst expectations of $247 million. That pushed the company to a net loss of $34.9 million for the quarter, a reversal from a $2.6 million profit last year. While the company ships goods, not people, the numbers are yet another bout of turbulence for the aviation sector as a whole, where financial results are turning gloomy despite strong and growing demand.

Avison Young restructures: We’re keeping an eye on the events unfolding at Canadian real estate services firm Avison Young, where the company defaulted on a major loan, which led to a ratings downgrade for the company. The firm technically missed payments in the third and fourth quarters of last year on a US$325 million term loan, which led ratings agency S&P to slap a “selective default” rating on the company’s debt. While the company says its lenders had agreed to the non-payment as part of an imminent restructuring plan that could be announced as soon as today, missing payments is nonetheless eyebrow-raising, given the business the company is in: commercial real estate. The sector has been closely scrutinized of late because of a massive slowdown and devaluation of assets ever since interest rates started to rise in 2022. Avison Young says its restructuring will result in all 700 of its current partners continuing to own the majority of the firm, but no matter what happens it’s a story we’re watching with interest.