Buffett's Berkshire Hathaway Reports 57 Trillion KRW Loss in Q2

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Berkshire Hathaway, led by 'investment master' Warren Buffett, reported nearly 57 trillion won in losses for the second quarter, Bloomberg News reported on the 6th (local time).

In its second-quarter earnings report released that day, Berkshire Hathaway announced a net loss of $43.76 billion (56.8 trillion won). The massive net loss is interpreted as being due to a decline in stock prices.

According to the report, the net loss per Class A share was $29,754. This marks a significant turnaround to a loss compared to last year's earnings per share of $18,488.

Operating profit increased by 39% year-on-year to $9.283 billion, but the company recorded a $53 billion valuation loss on stock and derivative investments. In the second quarter, the stock prices of Berkshire Hathaway’s three major holdings?Apple, American Express, and Bank of America?fell by 21%. During the same period, the U.S. S&P index dropped by 16%.

Berkshire Hathaway’s net stock purchases in the second quarter amounted to $3.8 billion, and its cash holdings were $105.4 billion, nearly unchanged from the end of the previous quarter. The scale of share buybacks was $1 billion, down from $3.2 billion in the first quarter.

Bloomberg News reported that Buffett is following the long-standing adage "Buy The Dip," which means buying stocks when prices are low.

Matthew Parazola, Senior Insurance Industry Analyst at BI, explained, "Berkshire net purchased $3.8 billion in stocks in the second quarter and $45.2 billion so far this year, but last year it net sold $16 billion annually. We believe this trend may continue." He added, "Historically, share buybacks have been a lower priority use of capital. The $1 billion in buybacks in the second quarter is a decrease compared to last year's quarterly average of $7 billion."

In a statement, Berkshire Hathaway said, "Investment gains and losses in any particular quarter are generally meaningless for evaluating the company's performance." James Shanahan, an analyst at investment firm Edward Jones, commented, "Although Berkshire Hathaway posted losses in the second quarter, these results demonstrate the company's resilience," and added, "Despite high interest rates and inflationary pressures, the core business segments performed well."