Amid Market Rout, Berkshire Hathaway Posts A Big Investment Loss But Reports Strong Operating Earnings

Berkshire Hathaway’s operating profits jumped in the second quarter despite fears of slowing growth, but Warren Buffett’s conglomerate was not immune to the overall market turmoil. According to Berkshire Hathaway, the conglomerate’s operating earnings – which include profits made by the conglomerate’s many businesses like insurance, railroads, and utilities – reached $9.283 billion in the second quarter of 2022. It marked a 38.8% increase from the same quarter a year ago. During the quarter, the company suffered a loss of $53 billion on its investments. The legendary investor once again urged investors not to pay attention to quarterly fluctuations in his equity investments. “The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules,” Berkshire said in a statement.

During the second quarter, stocks declined into a bear market following the Federal Reserve’s aggressive rate hikes to tame soaring inflation. The S&P 500 posted a quarterly loss of more than 16% – its largest quarterly drop since March 2020. For the first half, the broader market index dropped 20.6% for its largest first-half decline 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 outperforming the S&P 500 significantly, down 2,5% versus the equity benchmark’s 13% loss year to date. During the second quarter, Berkshire spent approximately $1 billion on share repurchases, bringing the six-month total to $4.2 billion. However, that’s a slower repurchase pace than the one seen in the first quarter, when the company bought back $3.2 billion of its own stock. While the conglomerate has been more active in deal-making and stock picking, it still accumulated substantial cash at the end of June, totaling $105.4 billion.

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