An Andy Warhol-like print of Berkshire Hathaway CEO Warren Buffett hangs outside a clothing stall at Berkshire Hathaway Inc’s first in-person annual meeting since 2019 in Omaha, Nebraska, USA, April 30, 2022.
scott morgan | Reuters
Berkshire Hathaway’s operating profits jumped in the second quarter despite fears of slowing growth, but Warren Buffett’s conglomerate has not been immune to the overall market turmoil.
The conglomerate’s operating profits — which encompass earnings earned by the myriad of conglomerate-owned businesses like insurance, railroads and utilities — totaled $9.283 billion in the second quarter of 2022, a reported Berkshire on Saturday morning. It marked a 38.8% increase from the same quarter a year ago.
However, the company recorded a $53 billion loss on its investments in the quarter. The legendary investor again asked investors not to focus on the quarterly fluctuations of his stock investments.
“The amount of investment gains/losses in a given quarter is generally meaningless and provides net earnings per share figures that can be extremely misleading to investors with little or no knowledge of accounting rules” , Berkshire said in a statement.
Stocks fell in a bear market during the second quarter after aggressive rate hikes by the Federal Reserve to rein in soaring inflation raised fears of a recession. The S&P 500 posted a quarterly loss of more than 16% – its biggest single-quarter drop since March 2020. For the first half, the broader market index fell 20.6% for its steepest decline in the first half since 1970.
The conglomerate’s Class A stock fell more than 22% in the second quarter, and is now down nearly 20% from an all-time high reached on March 28. Still, Berkshire’s stock is significantly outperforming the S&P 500, down 2.5% from the stock benchmark’s 13% loss year-to-date.
Berkshire said it spent about $1 billion on share buybacks in the second quarter, bringing the six-month total to $4.2 billion. However, this is a slower pace of repurchase than seen in the first quarter, when the company repurchased $3.2 billion of its own stock.
The conglomerate showed a huge cash hoard of $105.4 billion at the end of June, although the giant was more active in closing deals and picking stocks.
“The Oracle of Omaha” has steadily increased its stake in Occidental Petroleum since March, giving Berkshire a 19.4% stake in Occidental worth about $10.9 billion. Occidental has been the best performing stock in the S&P 500 this year, as its price more than doubled due to soaring oil prices.
In late March, the company announced it had agreed to buy insurer Alleghany for $11.6 billion, marking Buffett’s biggest deal since 2016.