An Andy Warhol-esque print of Berkshire Hathaway CEO Warren Buffett hangs outside a clothing stand at Berkshire Hathaway Inc’s first in-person annual meeting since 2019 in Omaha, Nebraska, US April 30, 2022.
Scott Morgan | Reuters
Berkshire Hathaway’s corporate profits rose in the second quarter despite fears of slowing growth, but the Warren Buffett conglomerate was not immune to general market turmoil.
The conglomerate’s corporate profits — which include profits made from the conglomerate’s numerous companies, such as insurance, railroads and utilities — totaled $9.283 billion in the second quarter of 2022, Berkshire reported Saturday morning. It marked an increase of 38.8% compared to the same quarter a year ago.
However, the company posted a $53 billion loss on its investments during the quarter. The legendary investor again asked investors not to focus on the quarterly fluctuations in his stock investments.
“The amount of investment gains/losses in any given quarter is usually meaningless and produces net earnings per share figures that can be extremely misleading to investors who have little or no knowledge of accounting rules,” Berkshire said in a statement.
Equities plunged into a bear market in the second quarter after aggressive rate hikes by the Federal Reserve to curb rising inflation raised fears of a recession. The S&P 500 posted a quarterly loss of more than 16% — the largest quarterly decline since March 2020. For the first half, the broader market index fell 20.6% for the largest first-half drop since 1970.
The conglomerate’s Class A share fell more than 22% in the second quarter and is now down nearly 20% from its all-time high on March 28. Still, Berkshire’s stock is significantly outperforming the S&P 500, down 2.5% from the stock benchmark’s 13% loss in the year so far.
Berkshire said it spent about $1 billion on share repurchases in the second quarter, bringing the six-month total to $4.2 billion. However, that’s a slower buyback rate than in the first quarter, when the company repurchased $3.2 billion of its own shares.
The conglomerate showed a huge cash supply of $105.4 billion at the end of June, though the giant has been 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 approximately $10.9 billion. Occidental was the best-performing stock in the S&P 500 this year, more than doubling in price due to rising oil prices.
In late March, the company said it agreed to buy insurer Alleghany for $11.6 billion, which is Buffett’s biggest deal since 2016.
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