An Andy Warhol-like print of Berkshire Hathaway CEO Warren Buffett hangs outside a coat rack during the first in-person annual meeting since 2019 of Berkshire Hathaway Inc in Omaha, Nebraska, U.S. on April 30, 2022.
Scott Morgan | Reuters
Berkshire Hathaway̵[ads1]7;s operating profit rose in the second quarter despite fears of slowing growth, but Warren Buffett’s conglomerate was not immune to the general market turmoil.
The conglomerate’s operating income — which includes profits from the myriad businesses owned by the conglomerate such as insurance, railroads and utilities — totaled $9.283 billion in the second quarter of 2022, Berkshire reported Saturday morning. That marked an increase of 38.8% from the same quarter a year ago.
However, the company reported a $53 billion loss on its investments during the quarter. The legendary investor again asked investors not to focus on the quarterly fluctuations in stock investments.
“The amount of investment gains/losses in a given quarter is usually meaningless and provides net earnings per share figures that can be extremely misleading to investors with little or no knowledge of accounting rules,” Berkshire said in a statement.
Stocks tumbled into a bear market during the second quarter after aggressive rate hikes by the Federal Reserve to curb rising inflation sparked fears of a recession. The S&P 500 posted a quarterly loss of more than 16% — the biggest one-quarter drop since March 2020. For the first half, the broader market index fell 20.6% for its biggest first-half decline since 1970.
The conglomerate’s Class A stock fell more than 22% in the second quarter and is now down nearly 20% from a record high reached on March 28. Still, Berkshire stock is significantly outperforming the S&P 500, down 2.5% compared with the stock benchmark’s 13% loss so far this year.
Berkshire said it spent about $1 billion on share buybacks during the second quarter, bringing its six-month total to $4.2 billion. However, that’s a lower pace of buybacks than seen in the first quarter, when the company bought back $3.2 billion of its own stock.
The conglomerate showed a massive cash balance of $105.4 billion at the end of June, although the giant has been more active in deal-making and stock-picking.
The “Oracle of Omaha” has steadily increased its Occidental Petroleum stake since March, giving Berkshire a 19.4% Occidental stake worth about $10.9 billion. Occidental has been the best performing stock in the S&P 500 this year, more than doubling in price on the back of rising oil prices.
In late March, the company said it agreed to buy insurer Alleghany for $11.6 billion — marking Buffett’s biggest deal since 2016.