Stock market crash hits Warren Buffett's investments hard

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, not even the Oracle of Omaha is immune to the attacks. market fluctuations.

With the markets falling and a portfolio of shares valued at more than 300,000 million euros, the fall of the Stock Market has caused its group heavy losses in the second quarter, although the operating result of its businesses has improved.

The decline in prices has caused Berkshire Hathaway to have suffered losses of 38,295 million dollars (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, according to the company has communicated.

Accounting regulations require it to record unrealized capital gains and losses in the income statement, and in the second quarter it has suffered a depreciation of its investments amounting to 53,000 million dollars.

The sharp fall in the shares of Apple and Bank of America, his two largest investments, has weighed down the valuation of the Warren Buffett group's portfolio, which at the last shareholders' meeting showed its most conservative side: "We have an extreme aversion to incurring permanent losses with their funds”, he told his partners at the time.

“Psychologically, we would die if we lost a lot of their money.

We don't know what the economy will do, but we do know that we wake up every morning and want to have safe investments."

All in all, after the portfolio movements it has made in the first half, Berkshire Hathaway still has unrealized capital gains of 177,940 million dollars in its investments, according to its semi-annual results report.

In other words, with the drop in the second quarter, he earns less than three months ago, but the market value of his portfolio is still much higher than the acquisition price.

According to the aforementioned report, the main stock positions of the company led by Buffett are Apple (125,100 million dollars of investment at market value), Bank of America (32,200 million), Coca-Cola (25,200), Chevron (23,700) and American Express (21,000).

minor purchases

The firm has not been especially active with its portfolio in the second quarter after the strong purchases made in the first, of more than 50,000 million.

Now, share purchases have hovered around $6.1 billion, against sales of about $2.3 billion.

The company has not yet revealed the details of the evolution of its entire portfolio, something that it will have 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 invested heavily in Occidental Petroleum, where he held 17% of the capital, valued at $9.3 billion at the end of the half, in addition to a $10 billion portfolio of the company's preferred stock and a significant volume of options.

Buffett has continued to buy shares in July and already has about 20% of the capital.

The accounting losses suffered in the first half of the year are the largest since the first quarter of 2020, when the pandemic was declared and the stock markets sank, but the company downplays them: “The amount of gains/losses on investments in a given quarter is usually not significant and yields figures for net results per share that can be very misleading for investors who have little or no knowledge of accounting standards, ”warns the company in the statement in which it has released its results.

The company prefers to highlight the operating results of its businesses and things are going well there.

The conglomerate has mainly insurance, rail transport and energy firms, along with many others, which it manages directly and which run parallel to its investment portfolio on the stock market.

With those businesses, the group's operating profit in the first half of 2022 grew 19% to 16,323 million dollars, thanks to a great second quarter in which profits grew 39% with the insurance division as a great engine.