Berkshire Hathway Profit Drops, Elephant Gun Still Loaded (NYSE: BRK.A) (NYSE: BRK.B)

NEW YORK - Berkshire announced its first quarter results at its annual shareholder meeting on Saturday. The weekend was mired in the controversy concerning David Sokol the former President and CEO of NetJets a subsidiary of the Berkshire. The company is led by famed investor Warren Buffett. Buffet is known as the Oracle of Omaha for his ability to predict the future regarding stocks.

Buffett and his long time friend and Vice-Chairman at Berkshire, Charlie Munger answered questions all weekend concerning how Berkshire handled the incident with Sokol. Analysts have panned Berkshire for its supposed lack of internal controls. The company is seen to have weak internal controls because Buffett chooses not to interfere with how managers run their businesses inside Berkshire.

An example of this Laissez fair approach was seen In 1983 when Buffett acquired Nebraska Furniture Mart from Rose Blumkin, the then ninety year old businesswoman. The furniture mart which began in her basement in 1937 transformed into a seventy five acre store and today is the largest home furnishing store in North America. Buffett, who had tried to acquire the store for a long time walked into Nebraska Furniture on his birthday and asked Rose to list a price. She said $55 million and he accepted in a famous hand shake deal. Buffett made the deal without reviewing the company’s financial records. He said “I would rather have her word than that of all the big eight auditors." He also said he would be part of any business with Blumkin, even if it was a “popcorn stand.” Rose Blumkin continued to run the business as a subsidiary of Berkshire until her death in 1998 at 104 years old.

Buffett said Sokol's actions were ixplicable and inexcusable the same words he used when he took over Salomon Brothers in the early 1990's. Buffett put his reputation on the line when he took over as Salomon's Brothers CEO, to avoid the company going into bankruptcy.

Buffett told investors that Berkshire is currently looking at two acquisitions, both of which were not proposed by Sokol. The deals would be roughly as large at the Lubrizol deal which was $9.5 billion.

Berkshire reported total earnings of $1.5 billion it would have been more but the quarter was mired in catastrophe losses. The company lost close to $1.7 billion due to catastrophes in Japan, Australia and New Zealand. Buffett also highlighted the strong gains shown by GEICO his insurance subsidiary which specializes in auto-insurance. The company grew auto policies by nearly 50% compared to last year's quarter.