Andy Warhol-style print of Berkshire Hathaway CEO Warren Buffett hangs in front of a clothing stand during Berkshire Hathaway Inc’s first personal annual meeting of 2019 in Omaha, Nebraska, April 30, 2022.
Scott Morgan | Reuters
Berkshire Hathaway’s operating profits rose in the second quarter despite fears of slowing growth, but the Warren Buffett conglomerate was not immune to the overall market turmoil.
The conglomerate’s operating revenues – including profits from countless conglomerate companies such as insurance, railroads and utilities – totaled $ 9.283 billion in the second quarter of 2022, Berkshire reported on Saturday morning. This meant an increase of 38.8% compared to the same quarter a year ago.
However, the company saw a loss of $ 53 billion on its investments during the quarter. The legendary investor again asked investors not to focus on quarterly fluctuations in their equity investments.
“The amount of investment gain / loss in any given quarter is usually irrelevant and provides net earnings per share figures that can be very confusing to investors with little or no accounting knowledge,” Berkshire said in a statement.
Stocks slumped in the second quarter after aggressive rate hikes by the Federal Reserve to contain soaring inflation sparked fears of a recession. The S&P 500 posted a quarterly loss of more than 16% – the biggest drop by a quarter since March 2020. The broader market index fell by 20.6% in the first half of the year, the largest drop in the first half since 1970.
The conglomerate’s A-class shares fell more than 22% in the second quarter, and are now down almost 20% from their March 28 record. Even so, Berkshire shares significantly outperform the S&P 500 index, down 2.5% from a 13% loss in the equity benchmark since the start of the year.
Berkshire said it spent about $ 1 billion buying shares in the second quarter, bringing it six months to $ 4.2 billion. However, this is a slower pace of repurchase than in the first quarter, when the company bought back $ 3.2 billion of its own shares.
At the end of June, the conglomerate showed enormous cash reserves of $ 105.4 billion, even though the giant was more active in making deals and selecting stocks.
Since March, Oracle of Omaha has been steadily increasing its stake in Occidental Petroleum, giving Berkshire a 19.4% stake in the Occidental region worth approximately $ 10.9 billion. Occidental has been the best performing stock in the S&P 500 this year, doubling the price as oil prices rise.
In late March, the company said it had agreed to buy Alleghany’s insurer for $ 11.6 billion – making Buffett’s largest deal since 2016.