Billionaire investor Warren Buffett‘s Berkshire Hathaway reported a loss of $43.8 billion in the second quarter of 2022, as the share prices of the firm’s top stock holdings slumped during the period. However, the loss is on the back of a largely unrealised $53 billion fall in the value of investments, the Warren Buffett firm said on Saturday. In fact, Berkshire Hathaway is reportedly taking advantage of the share market slump to load up more equity shares. Berkshire’s Q2 loss translates to $29,754 per Class A share. The firm posted an operating profit of $9.3 billion during the quarter.
Stocks of three major Berkshire Hathaway holdings – Apple Inc, Bank of America Corp and American Express Co – each fell more than 21% during April-June, compared with a 16% decline in the S&P 500. However, these stocks have rebounded during the third quarter, meaning Berkshire’s portfolio is already worth more than it was at the end of the quarter. Besides investments, Berkshire owns more than 90 companies.
The company said in its earnings report that “significant disruptions of supply chains and higher costs have persisted” as new COVID-19 variants emerge and because of geopolitical conflicts including Russia’s invasion of Ukraine. However, direct losses to the company have not been material, despite the impact of higher costs for materials, shipping and labour, the company assured.
Warren Buffett’s stock purchase
According to the results, Berkshire’s $6.15 billion of stock purchases fell from $51.1 billion in the first quarter, when it took major stakes in oil companies Chevron Corp and Occidental Petroleum Corp. Berkshire expects to complete its $11.6 billion takeover of insurance company Alleghany Corp in the fourth quarter. Berkshire also stated in the regulatory filing that it was sitting on $105.4 billion cash at the end of the quarter, which was little changed from the $106 billion it reported at the end of the first quarter, signalling that Buffett wasn’t buying nearly as many stocks during the second quarter although it reported investing several billion in Occidental Petroleum.
Also Read: Market surge turns spotlight on valuations
Berkshire Hathaway’s share buyback
Berkshire Hathaway repurchased $1 billion of shares during the second quarter, less than the $3.2 billion it bought back during the first three months of this year. Buffett has turned to stock buybacks as one way to deploy billions of dollars in cash and return some excess funds to shareholders, said Bloomberg in a report. Conglomerate’s auto insurer Geico reported an underwriting loss of $487 million, as inflation and higher used-car prices makes it costlier to fix and replace damaged vehicles.