The slump in U.S. stock prices weighed on Berkshire Hathaway’s second-quarter earnings as the company, run by billionaire Warren Buffett, posted a $43.8 billion loss.
Still, Erkshire posted better operating results as improved results from reinsurance and BNSF rail offset a loss at Geico auto insurer, where auto parts shortages and higher vehicle prices pushed up accident claims losses.
Rising interest rates helped Berkshire’s insurance units generate more money from investments, while the stronger US dollar boosted returns on the company’s European and Japanese debt investments.
Investors watch Berkshire because of Buffett’s strong reputation and because the results of its dozens of operating units in the insurance, railroad construction, energy, and retail sectors often reflect broader economic trends.
Berkshire’s net loss was $29,754 per Class A share, compared to net income of $28.1 billion, or $18,488 per Class A share, a year ago.
Quarterly operating income increased 39 percent to $9.28 billion, or about $6,326 per Class A share, from $6.69 billion, or $4,424 per Class A share, a year ago.
Berkshire slowed buybacks of its own stock, repurchasing $1 billion in the quarter and $4.2 billion so far this year.
The company also bought more than $6.1 billion worth of stock, compared to $51.1 billion in the first quarter when it bought large stakes in oil companies Chevron Corp and Occidental Petroleum Corp.
Berkshire ended June with $105.4 billion in cash and equivalents. The company expects to close its $11.6 billion acquisition of insurance company Alleghany Corp YN in the fourth quarter.
Net results fluctuate wildly because the Omaha, Nebraska-based conglomerate has to report investment gains and losses on its stock holdings, even when it doesn’t buy and sell anything.
That proved a drag in the second quarter, as Berkshire posted $53 billion in losses from investments and derivatives.
Shares in three major holdings — Apple Inc AAPL.O, Bank of America Corp BAC.N and American Express Co AXP.N — each fell more than 21 percent.
Buffett is telling investors to ignore the volatility, and Berkshire will make money if its stock rises over time.
In 2020, for example, Berkshire lost nearly $50 billion in the first quarter as the Covid-19 pandemic took hold, but made $42.5 billion for the full year.
Berkshire owns dozens of companies, including the eponymous energy company, several manufacturing companies, and consumer companies like Duracell batteries, Fruit of the Loom underwear, and See’s Candies.
The company’s shares have outperformed the broader U.S. market in 2022, falling 2 percent compared to a 13 percent decline in the Standard & Poor’s 500.
https://www.independent.ie/business/warren-buffetts-berkshire-hathaway-posts-massive-43bn-loss-in-second-quarter-of-2022-41894043.html Warren Buffett’s Berkshire Hathaway posts a massive $50 billion loss in the second quarter of 2022