An Andy Warhol-like print of Berkshire Hathaway CEO Warren Buffett hangs outside a clothing stall during Berkshire Hathaway Inc’s first in-person annual meeting since 2019 in Omaha, Nebraska, USA, April 30 of 2022.
Scott Morgan | Reuters
Berkshire Hathaway’s operating profit rose in the second quarter despite fears of slowing growth, but Warren Buffett’s conglomerate was not immune to the broader market turmoil.
The conglomerate’s operating profit, which encompasses profits made from the myriad of businesses owned by the conglomerate such as insurance, rail and utilities, totaled $9.283 billion in the second quarter of 2022, Berkshire reported Saturday morning. It marked a 38.8% increase from the same quarter a year earlier.
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 of their stock investments.
“The amount of investment gains/losses in a given quarter is generally meaningless and yields 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. .
Stocks plunged into a bear market during the second quarter after aggressive rate hikes by the Federal Reserve to rein in runaway inflation sparked fears of a recession. The S&P 500 posted a quarterly loss of more than 16%, its biggest drop in a quarter since March 2020. During the first half, the broader market index fell 20.6%, its biggest drop in the first half since 1970.
The conglomerate’s Class A shares fell more than 22% in the second quarter, and are now down almost 20% from an all-time high reached on March 28. Still, Berkshire shares are significantly outperforming the S&P 500, down 2.5% from the equity benchmark’s 13% loss year to date.
Berkshire said it spent roughly $1 billion on share buybacks during the second quarter, bringing the six-month total to $4.2 billion. Still, that’s a slower pace of buybacks than was seen in the first quarter, when the company bought back $3.2 billion of its own shares.
The conglomerate showed a massive cash buildup of $105.4 billion at the end of June, even though the giant has been more active in stock trading and picking.
The “Oracle of Omaha” has been steadily increasing its stake in Occidental Petroleum since March, giving Berkshire a 19.4% stake in Occidental worth approximately $10.9 billion. Occidental has been 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 had agreed to buy insurer Alleghany for $11.6 billion, marking Buffett’s biggest deal since 2016.