Berkshire Hathaway’s investment philosophy has always been long-term. That hasn’t changed even though its chairman, Warren Buffett, turns 92 this month, and his right-hand man, Charlie Munger, is already 98. In the short term, however, even the Oracle of Omaha n is not immune to attack. market fluctuations. With falling markets and a portfolio of shares valued at more than 300,000 million euros, the fall in the stock market caused his group heavy losses in the second quarter, even if the operating profit of its businesses improved.
Lower prices caused Berkshire Hathaway to suffer losses of $38,295 million (about 37,600 million euros at current exchange rates) in the first six months of the year, compared to profits of 39,805 million in the same period of 2021, as reported by the company. Accounting regulations require it to recognize unrealized gains and losses in the income statement, and in the second quarter it suffered a $53 billion write-down of its investments.
The sharp fall in the shares of Apple and Bank of America, its two largest investments, weighed on the valuation of the portfolio of the Warren Buffett group which, during the last general meeting, showed its most conservative side: “We have an extreme aversion to incurring permanent losses with your funds. he then said to his partners. “Psychologically, we would die if we lost a lot of their money. We don’t know what the economy is going to do, but we know that we wake up every morning and want to have safe investments.”
In total, after the portfolio movements it made in the first half of the year, Berkshire Hathaway still has unrealized capital gains of $177.940 million on its investments, according to its half-year results report. In other words, with the decline in the second quarter, he earns less than three months ago, but the market value of his portfolio is still well above the acquisition price.
According to the aforementioned report, The main stock positions of the company that Buffett manages are Apple (125,100 million dollars of investment in market value), Bank of America (32,200 million), Coca-Cola (25,200), Chevron (23,700) and American Express (21,000). ).
The firm was not particularly active with its portfolio in the second quarter after the major purchases made on the first, more than 50,000 million. Now, stock purchases have hovered around $6.1 billion, versus sales of around $2.3 billion. The company has yet to reveal details of how its entire portfolio will evolve, which it will need to do in the coming weeks.
Oil company Chevron, which has benefited from high oil prices, is the latest to enter the Oracle of Omaha’s list of major investments. Buffett has also been heavily invested in Occidental Petroleum, of which he has a 17% stake, valued at $9.3 billion at the end of the semester, in addition to a $10 billion portfolio of preferred stock in the company and a large volume of options. Buffett continued to buy shares in July and already owns around 20% of the capital.
The first-half accounting losses are the largest since the first quarter of 2020, when the pandemic hit and stock markets crashed, but the company is downplaying them: “The amount of investment gains/losses in a quarter is often not meaningful and gives net earnings per share figures which can be very misleading for investors with little or no knowledge of accounting standards. in the statement in which he published his results.
The company prefers to highlight the operating results of its businesses and things are going well there. The conglomerate mainly consists of insurance, railroad and energy companies, as well as many others, which it manages directly and which run parallel to its stock market investment portfolio.
With these activities, the group’s operating profit in the first half of 2022 increased by 19% to reach $16,323 million, thanks to an excellent second quarter in which profits increased by 39% with the insurance division as a large engine.