Berkshire Hathaway, the conglomerate run by billionaire Warren Buffett, reported a loss of $43.8 billion in the second quarter of 2022. Despite this, Berkshire earned an operating profit of $9.283 billion.
That was achieved by offsetting new losses at the Geico car insurer, where parts shortages and rising used car prices increased accident claims, with gains from reinsurance and the BNSF railroad.
It represented an increase of 38.8 per cent from the same quarter a year prior. Profits from the conglomerate’s numerous industries, including insurance, railroads, and utilities, are included in operational earnings.
Berkshire said on Saturday that a largely unrealised $53 billion decrease in the value of its investments caused it to post a loss of $43.8 billion.
A Reuters report quoted James Shanahan, an Edward Jones & Co analyst, as saying that despite the net loss, “the results show Berkshire’s resilience” Shanahan also rated Berkshire as “neutral”.
Because of Buffett’s reputation and the fact that the performance of the conglomerate’s several operating divisions frequently tracks broader economic trends, investors pay close attention to Berkshire.
These entities include reliable revenue generators like its namesake energy firm, several industrial firms, and well-known consumer brands, including Dairy Queen, Duracell, Fruit of the Loom, and See’s Candies.
A CNBC report stated that in the second quarter, stocks fell into a bear market as the Federal Reserve aggressively raised interest rates to combat skyrocketing inflation and ease concerns of a recession.
Since March, Buffet has been slowly increasing his holdings in Occidental Petroleum, giving Berkshire a 19.4 per cent share in the company, currently valued at $10.9 billion.
The S&P 500’s best-performing stock this year has been Occidental, which has seen its price more than double due to rising oil prices.
According to a report in Financial Times, Buffet reportedly indicated during the conglomerate’s annual meeting in Nebraska in April that the frenzy of multibillion-dollar stock purchases was likely to slow as the year went by, remarking that the environment in the headquarters of the corporation had grown more “lethargic”.
Later this month, when Berkshire and other major money managers disclose their investments to regulators, investors will receive a more thorough update on how the company’s stock portfolio has changed.
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