An Andy Warhol-esque print of Berkshire Hathaway CEO Warren Buffett hangs in front of a clothing stand during Berkshire Hathaway Inc’s first in-person annual meeting since 2019 in Omaha, Nebraska, the United States, on April 30, 2022.
Scott Morgan | Reuters
Berkshire Hathaway’s operating profits soared in the second quarter despite fears of slowing growth, but Warren Buffett’s conglomerate wasn’t immune to the broader market turmoil.
The conglomerate’s operating income — which includes profits from the conglomerate’s myriad businesses like insurance, railroads and utilities — totaled $9.283 billion in the second quarter of 2022, Berkshire reported Saturday morning. It marked a 38.8% increase over the same quarter last year.
However, the company posted a $53 billion loss on its investments during the quarter. The legendary investor once again urged investors not to focus on quarterly swings in his stock investments.
“The level of investment gains/losses in any given quarter is typically meaningless and provides net earnings per share figures that can be highly misleading to investors with little or no knowledge of accounting regulations,” Berkshire said in a statement.
Stocks plunged into a bear market in the second quarter after aggressive rate hikes by the Federal Reserve to stem rising inflation sparked recession fears. The S&P 500 posted a quarterly loss of more than 16% — its biggest quarterly drop since March 2020. In the first half, the broader market index fell 20.6%, marking its biggest first-half drop since 1970.
The conglomerate’s Class A shares fell more than 22% in the second quarter and are now down nearly 20% from an all-time high hit March 28. Still, Berkshire’s stock is comfortably outperforming the S&P 500, down 2.5% versus the S&P 500, down 13% from the stock benchmark year-to-date.
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 pace of repurchases than in the first quarter, when the company repurchased $3.2 billion of its own stock.
The conglomerate had a massive $105.4 billion cash hoard at the end of June, though the giant has been more active in deals and stock picking.
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 was the best-performing stock in the S&P 500 this year, more than doubling on rising oil prices.
In late March, the company said it had agreed to buy insurer Alleghany for $11.6 billion — Buffett’s largest deal since 2016.