- Warren Buffett’s right-hand man Charlie Munger, who once called crypto ‘rat poison,’ says we should follow China’s lead and ban cryptocurrencies altogether Fortune
- Charlie Munger says the U.S. should follow in China’s footsteps and ban cryptocurrencies CNBC
- Berkshire Hathaway’s Charlie Munger urges U.S. to ban crypto (Cryptocurrency:BTC-USD) Seeking Alpha
- Why America Should Ban Crypto – WSJ The Wall Street Journal
- Billionaire Charlie Munger says crypto is a ‘gambling contract’ that US should ban New York Post
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How Warren Buffett’s Berkshire Hathaway came to own 20% of American Express
American Express (AXP), one of the world’s top credit card companies, has also long been a favorite of Berkshire Hathaway (BRK-A, BRK-B) CEO Warren Buffett.
“You can’t create another American Express,” Buffett told Bloomberg in December. “I could create another shoe store. I could create another business publication. I could do all kinds of things with hundreds of billions of dollars. But I can’t put in the minds of people what is in their minds about American Express.”
As of September 29, 2022, Berkshire held 151,610,700 AmEx shares, or 20.29% of the total. At the end of 2021, AmEx was Berkshire’s largest securities holding by weight and third-largest holding by market cap, with its stake valued at $24.8 billion — which grew to $26.1 billion by September 29, 2022.
In 2022, Berkshire built a stake of at least 20.2% of Occidental Petrleum (OXY) and obtained regulatory approval to buy up to 50% of the oil giant’s common stock. So while AmEx may no longer be Berkshire’s largest holding by weight, the company’s value to Berkshire is clear.
“It’s sort of like a Good Housekeeping seal of approval,” American Express CEO Stephen Squeri told Yahoo Finance recently. “Warren and Berkshire are iconic investors, and to have him speak about the brand and speak about the company, and to speak about the direction that we’re going so enthusiastically [is important].”
In 2020, when the pandemic hit, AmEx stock declined to as low as $66 as lockdowns and travel bans dragged down profits by 39%. But Buffett retained his stake in the company, even as he sold airline and bank stocks.
AmEx was able to rebound after enduring the COVID-induced economic downturn and reached its highest price in decades at $196 a share in 2022.
That momentum has carried over into 2023: AmEx’s latest quarterly results showed a slight miss for its fourth quarter, but the company indicated it remains positive on its outlook for the remainder of the year.
How Buffett acquired his stake in AmEx
Although AmEx’s brand emerged from the pandemic in a position of strength, that hasn’t always been the case.
Buffett’s interest in AmEx began in the 1960s, during the first wave of consumer credit via banks. For American Express, it wasn’t without a bit of controversy.
In 1963, Anthony De Angelis, the founder of Allied Crude Vegetable Oil Company, used his company’s inventory as collateral for loans from more than 50 companies, including AmEx. De Angelis used these loans to drive up prices in the soybean oil market and increase the value of Allied.
Eventually, a whistleblower came forward claiming that Allied was misleading AmEx to get more loans by filling up oil tanks with water. This was proven to be true and De Angelis filed for bankruptcy and went to prison for seven years. The impropriety became known as the “salad-oil scandal” and mounted concerns on Wall Street as AmEx now had to pay Allied’s bill.
“Every trust department in the United States panicked,” Buffett said about the scandal. “I remember the Continental Bank held over 5% of the company and all of a sudden not only do they see that the trust accounts were going to have stock worth zero, but it could get assessed. The stock just poured out, of course, and the market got slightly inefficient for a short period of time.”
Buffett used the opportunity to acquire 5% of AmEx for roughly $20 million.
The credit card boom of the ’70s and ’80s made AmEx a top player in the market. By the late ’90s, two-thirds of American households had a credit card. Buffett could now go all out and make his first large stake in the company in 1991 with $300 million.
Within seven years, Buffett owned more than 50 million shares of the company. Berkshire Hathaway hasn’t purchased any American Express stock since the late 1990s, but its stake in AmEx has continued to increase as a result of stock buybacks.
Between 1998 and 2005, Berkshire’s stake climbed from 11.2% to 12%. In 2020, AXP became Berkshire’s largest holding by percentage.
And even though AmEx had a rough start to 2016 financially, Buffett stood by his investment.
“Now we own 20% of American Express,” Buffett said at the 2022 Annual Berkshire Hathaway Shareholders Meeting. “That happens to have worked out extremely well. If they overpaid for the stock and all that — it doesn’t solve every problem — but it’s a wonderful thing if you’ve got an asset you like and they take your ownership interest up.”
AmEx’s pandemic revamp
One of American Express’s greatest assets has been its perception as a status symbol, which has endured after undergoing a series of rebranding efforts.
The company has a simple revenue model: Most of its revenue is generated from interest from balances and fees from cardholders and from merchants. Merchants are charged more than AmEx competitors such as Visa (V) or Mastercard (MA) because AmEx cardholders tend to be wealthier and spend more, which benefits merchants down the line.
AmEx also collects revenue from the data it gathers on cardholder spending, which is used to target marketing and provide offers to customers. That has, in turn, helped AmEx capture the interest of millennial and Gen Z consumers in recent years as the company has evolved from being a traditional luxury credit card provider to a digital payment provider.
AmEx rebranded its Platinum card as a “lifestyle card” by increasing its fees and at-home perks and dove into e-commerce and food delivery services with by increasing rewards. Since the strategic changes went into effect, the company doubled its number of Platinum cardholders, with millennials and Gen Z customers making up roughly 60% of all new consumer cardholder growth.
And as pandemic restrictions were lifted, AmEx grew its global reach with new travel benefits. They offered more rewards, points, and a new Centurion airport luxury lounge. AmEx’s payment method is now accepted on most websites in over 178 countries, according to Statista.
“This whole concept of generational relevance is huge for us,” Squeri told Yahoo Finance. “We’ll continue to modify our products and add value to our products that not only speaks to millennials but speaks to Gen Xers and speaks to Boomers. Millennials and Gen Zers are the fastest-growing segment that we have.”
The AmEx CEO also stressed that Buffett “gets it right” as AmEx’s largest shareholder.
“He gets that the AmEx brand is special,” he said. “He tells me that all the time. We both agree the customer base is special. Anybody that has Warren as their largest shareholder would be pretty happy.”
—
Tanya is a data reporter at Yahoo Finance. Follow her on Twitter. @tanyakaushal00.
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Buffett’s Berkshire discloses $4.1 bln TSMC stake
Nov 14 (Reuters) – Berkshire Hathaway Inc (BRKa.N) said it bought more than $4.1 billion of stock in Taiwan Semiconductor Manufacturing (2330.TW), , a rare significant foray into the technology sector by billionaire Warren Buffett’s conglomerate.
The news sent shares in TSMC up more than 6% in Taiwan on Tuesday, as it boosted investor sentiment for the world’s largest contract chipmaker, which saw its shares hit a two-year low last month due to a sharp slowdown in global chip demand.
In a Monday regulatory filing describing its U.S.-listed equity investments as of Sept. 30, Berkshire said it owned about 60.1 million American depositary shares of TSMC.
Berkshire also disclosed new stakes of $297 million in building materials company Louisiana-Pacific Corp (LPX.N) and $13 million in Jefferies Financial Group Inc (JEF.N). It exited an investment in Store Capital Corp (STOR.N), a real estate company that agreed in September to be taken private.
The filing did not specify whether Buffett or his portfolio managers Todd Combs and Ted Weschler made specific purchases and sales. Investors often try to piggy back on what Berkshire buys. Larger investments are normally Buffett’s.
While Berkshire does not normally make big technology bets, it often prefers companies it perceives to have competitive advantages, often through their size.
TSMC, which makes chips for the likes of Apple Inc (AAPL.O), Qulacomm (QCOM.O) and Nvidia Corp (NVDA.O), posted an 80% jump in quarterly profit last month, but struck a more cautious note than usual on upcoming demand.
“I suspect Berkshire has a belief that the world cannot do without the products manufactured by Taiwan Semi,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, which owns Berkshire shares.
“Only a small number of companies that can amass the capital to deliver semiconductors, which are increasingly central to people’s lives,” he added.
Berkshire has had mixed success in technology.
Its more than six-year wager during the last decade in IBM Corp (IBM.N) did not pan out, but Berkshire is sitting on huge unrealized gains on its $126.5 billion stake in Apple, which Buffett views more as a consumer products company.
Apple is by far the largest investment in Berkshire’s $306.2 billion equity portfolio.
Berkshire disclosed the TSMC stake about 2-1/2 months after it began reducing a decade-old, multi-billion dollar stake in BYD Co (002594.SZ), China’s largest electric car company.
In the third quarter, Berkshire added to its stakes in Chevron Corp (CVX.N), Occidental Petroleum Corp (OXY.N), Celanese Corp (CE.N), Paramount Global (PARA.O) and RH (RH.N).
It also sold shares of Activision Blizzard Inc (ATVI.O), Bank of New York Mellon Corp (BK.N), General Motors Co (GM.N), Kroger Co (KR.N) and US Bancorp (USB.N).
Buffett, 92, has run Berkshire since 1965. The Omaha, Nebraska-based company also owns dozens of businesses such as the BNSF railroad, the Geico auto insurer, several energy and industrial companies, Fruit of the Loom and Dairy Queen.
Reporting by Jonathan Stempel in New York; Editing by David Gregorio and Bradley Perrett
Our Standards: The Thomson Reuters Trust Principles.
Buffett’s Berkshire Lifts Chevron Bet, Profits From Rate Hikes, Dollar
- Warren Buffett’s Berkshire Hathaway reported third-quarter earnings on Saturday.
- The investor’s company appears to have boosted its Chevron stake, and ramped up stock buybacks.
- Berkshire benefited from higher interest rates and a stronger US dollar.
Warren Buffett’s Berkshire Hathaway published third-quarter earnings on Saturday that teased fresh purchases of Chevron stock, and signaled a faster pace of share buybacks this quarter.
Berkshire confirmed it will treat a chunk of Occidental Petroleum’s profits as its own from now on. It also revealed the billion-dollar hit to its insurance business from Hurricane Ian, and the positive impact of higher interest rates and a stronger US dollar on its operations.
Here are 6 key insights from Berkshire’s Q3 earnings:
1. Stocking up
Berkshire appears to have bolstered its Chevron stake last quarter.
It disclosed the value of its position in the oil-and-gas major was $24.4 billion at the end of September. It held 161 million shares at the end of June, which would have been worth $23.2 billion at Chevron’s stock price of about $144 on September 30.
The discrepancy suggests it raised its stake to about 170 million shares last quarter.
Moreover, Berkshire may have boosted its number-one holding, Apple. It owned about 908 million shares of the iPhone maker at the end of December, and purchased nearly 4 million more shares in the second quarter of this year.
That stake would have been worth $126 billion on September 30, based on Apple’s stock price at the time. Yet Berkshire valued the position at $126.5 billion, suggesting it bought a few more shares.
Meanwhile, Berkshire reported an estimated $4.7 billion drop in the cost base of its financial stocks, a $2 billion drop for its commercial and industrial stocks, and a $700 million drop for its consumer-products stocks. Those declines point to which parts of its portfolio it pruned last quarter.
2. Bigger buybacks
Berkshire spent $1.05 billion repurchasing shares last quarter. It appears to have spent another $500 million or so on buybacks between October 1 and October 26, based on the decline in Berkshire’s outstanding shares and the average trading price of Berkshire stock in that period.
Buffett and his team are now on track to spend upwards of $1.5 billion on buybacks this quarter, which would trump their outlays in each of the past two quarters.
3. Sharing in Oxy’s success
Berkshire, which built a 20.9% stake in Occidental from scratch this year, said it would account for that holding using the equity method.
That means it will report a proportionate share of the oil-and-gas company’s revenues and earnings as its own, with a one-quarter lag as Occidental reports its quarterly earnings later than Berkshire.
The position could contribute $2 billion in quarterly revenues and $750 million in net income to Berkshire every three months, based on Occidental’s second-quarter financials.
4. Higher rates are helping
The Federal Reserve has hiked interest rates from nearly zero in March to a range of 3.75% to 4% today, in an effort to curb historically high inflation.
The US central bank’s rate increases boosted the amount of interest that Berkshire earned on its cash and Treasury bills. As a result, the company’s income from interest and other investments soared by 182% year-on-year to nearly $400 million last quarter.
5. Disaster strikes
Hurricane Ian buffeted Florida, South Carolina, and other US States last quarter. Berkshire, which owns a raft of insurance and reinsurance companies, suffered an after-tax blow of $2.7 billion to its profits from the catastrophe.
Geico, the Berkshire-owned auto insurer, incurred about $600 million of losses and related expenses from the tropical storm. Meanwhile, the reinsurance arm of Berkshire’s property-casualty business swallowed a $1.9 billion loss.
6. Greenback gains
Buffett famously favors American stocks such as Coca-Cola and Kraft Heinz, and has built a vast collection of US businesses including the BNSF Railway and See’s Candies.
Berkshire’s domestic focus meant it enjoyed a $1.2 billion pretax gain from the dollar’s surge against other world currencies in the past quarter. It only saw a $264 million foreign-exchange gain in the same period of 2021.
Moreover, Buffett’s company notched a $858 million gain from non-dollar-denominated debt. That’s partly because the yen debt it issued to hedge its investments in five Japanese companies became less onerous, thanks to a stronger dollar.
Read more: David Rubenstein sees Warren Buffett as the ultimate investor. The private equity billionaire lays out the 12 traits and habits that are key to Buffett’s success.
Interest rate rises boost Warren Buffett’s Berkshire Hathaway results
Warren Buffett’s Berkshire Hathaway is quickly becoming one of the principal beneficiaries from the sharp increase in interest rates in the US, as its fortress-like balance sheet begins to generate hundreds of millions of dollars in income for the sprawling conglomerate.
The interest the company earns on its $109bn cash pile nearly tripled from a year before to $397mn in the third quarter, it disclosed on Saturday, noting the gain was “primarily due to increases in short-term interest rates”.
Berkshire holds the vast majority of its cash in short-term Treasury bills, deposits at banks and in money market accounts, where interest rates have been rapidly rising as the Federal Reserve has tightened monetary policy. Last week the US central bank lifted rates to between 3.75 and 4 per cent, up from near zero at the year’s start, and traders expect that rate to top 5 per cent next year.
While tighter policy has sent shockwaves through financial markets — even bludgeoning the value Berkshire’s mammoth stock portfolio — it is finally beginning to pay dividends for companies and consumers holding cash.
Data from the Investment Company Institute showed that cash parked in money market funds that cater to everyday retail investors has swelled to a record high.
Buffett and Berkshire vice chair Charlie Munger have over the past decade presided over a significant expansion in Berkshire’s cash holdings, which they believe is critical given the potential catastrophic payouts the company’s insurance businesses could one day need to make.
It was a point underlined by third-quarter results that showed Berkshire was hit by a $3.4bn pre-tax loss from Hurricane Ian, which killed more than 100 people as it tore through parts of Florida. US president Joe Biden has said it will take years, not months, for the region to recover.
Berkshire’s insurance unit suffered an operating loss of $962mn during the quarter, with Geico warning that higher used auto parts prices and an increase in accidents were weighing on its results.
Buffett and Munger have long been able to stomach large losses in its insurance division because of the sizeable “float” — insurance premiums it collects before it must ultimately pay claims on obligations. That float has helped fuel its investments in stocks and fund the company’s acquisitions of businesses.
The sell-off in financial markets hampered Berkshire’s equity portfolio, which includes large stakes in Apple, American Express, Chevron and Bank of America. The company said its portfolio slid in value to $306.2bn from $327.7bn at the end of June.
Those declines pushed it to a net loss of $2.7bn in the period, or $1,832 per class A share, from a profit of $10.3bn a year before, worth $6,882 a share. Buffett has long characterised the swings in its investment portfolio — which it must recognise in its profit and loss statements due to accounting rules — as “meaningless”.
The dozens of businesses it owns, which are widely-watched for signs of the health of the American industrial and business complex, laid bare the resilience of the US economy while also signalling the potential slowdown engineered by the Fed. Berkshire’s results also showed the effects of inflation and the fights over better wages as real living standards come under pressure from higher prices.
Revenues at its BNSF railroad surged 17 per cent to $6.5bn, but profits slid as the volumes of freight it shipped declined and it paid higher wages to its employees. The railroad became a flashpoint earlier this year as more than 30,000 unionised workers at BNSF threatened to strike, pushing back against conditions and demanding a boost to pay.
A tentative agreement in September delivered concessions to employees and BNSF said pay costs rose 27 per cent in the third quarter from a year earlier.
The energy businesses within Berkshire’s utility division reported a 17 per cent jump in revenues, boosted by higher power costs.
But the company’s real estate brokerage unit saw sales tumble by nearly a fifth, and operating profits at the unit plummeted 72 per cent from the year before as the housing market cooled and it sold fewer homes.
Berkshire said higher mortgage rates were also expected to pressure its handful of businesses in the housing sector. During the quarter, however, those businesses — including the brick maker Acme and flooring group Shaw — were able to raise prices and registered strong demand.
Overall, operating earnings rose to $7.8bn from $6.5bn a year earlier. The results were helped by larger profits in its manufacturing and services business lines.
Berkshire, which this year bought a 21 per cent stake in energy company Occidental’s common stock, disclosed that in the fourth quarter it would begin reporting earnings from the oil and gas giant as part of its results.
The company also said it had spent just over $1bn in the quarter buying back its own stock.
Berkshire’s class A shares, which are down 4.1 per cent this year, have far outperformed the broader market. The benchmark S&P 500 has declined 20.9 per cent while an investor in US Treasuries has lost 15.3 per cent, according to Ice Data Services.
Buffett’s Berkshire continues to boost stake in Occidental
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Warren Buffett’s Berkshire Hathaway continues to collect shares of Occidental Petroleum in 2022.
Buffett’s conglomerate raised its stake in the company to 26.8% from 20.2%, according to Bloomberg.
The latest purchase comes after US regulators gave Berkshire the go-ahead last month to buy as much as half of the oil giant.
Berkshire has made several purchases of Occidental shares this year.
BUFFETT’S BERKSHIRE HATHAWAY WINS OK TO BUY 50% OCCIDENTAL STAKE
Berkshire chief Warren Buffett. (Daniel Zuchnik/WireImage / Getty Images)
The company’s first move into the Houston-based oil company was three years ago.
On Aug. 19, the Federal Energy Regulatory Commission (FERC) said its authorization was “consistent with the public interest,” after Berkshire said a larger stake would not hurt competition, undermine regulatory authority, or boost costs for consumers.
Occidental Petroleum Corporation sign. ( (Photo by Jay L. Clendenin/Los Angeles Times via Getty Images) / Getty Images)
BUFFETT’S BERKSHIRE HATHAWAY BUYS EVEN MORE OCCIDENTAL SHARES
The shopping spree began with an announcement in April, prior to the start of Berkshire’s annual meeting, that the company held a 14% stake. Buffett said that he decided Occidental was a “good place” to put money after reading an annual report.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BRK.A | BERKSHIRE HATHAWAY INC. | 429,819.43 | +2,969.43 | +0.70% |
| OXY | OCCIDENTAL PETROLEUM CORP. | 65.61 | +1.13 | +1.75% |
Berkshire bought another 5.9 million shares with the purchases made on May 2 and May 3
Berkshire Hathaway shareholders walk by a video screen at the company’s annual meeting in Omaha. (REUTERS/Rick Wilking/File Photo / Reuters Photos)
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Occidental’s share price has more than doubled this year, benefiting from rising oil prices following Russia’s Feb. 24 invasion of Ukraine.
Warren Buffett’s Berkshire Hathaway Cleared to Buy as Much as Half of Occidental’s Shares
In a regulatory filing Friday, the Federal Energy Regulatory Commission said that Berkshire Hathaway had asked for and received its permission to buy up to 50% of the driller’s shares. Berkshire has been loading up on Occidental’s shares this year, amassing roughly 20% of the company’s stock, public filings show, leaving many analysts to speculate whether Mr. Buffett would seek control of the company, one of the largest U.S. oil producers.
Occidental’s shares jumped to lead stock gains among the S&P 500 Friday, rising 9.9% after the publication of the ruling. The company’s stock has risen about 146% this year, far and away tops in the S&P 500 stock index, which is down 11% this year.
Berkshire requested the authorization on July 11 and said at the time it owned approximately 18.72% of the outstanding common shares of Occidental, according to the federal ruling. Berkshire has since added shares and earlier this month said in a securities filing that it held roughly 20% of Occidental’s common stock. Berkshire also owns warrants to buy another big slug of Occidental’s common stock as well as $10 billion worth of preferred shares that pay Berkshire about $800 million annually, filings show.
“It is concluded that the Proposed Transaction is consistent with the public interest,” Carlos D. Clay from the FERC’s Office of Energy Market Regulation wrote in the filing.
A spokesman for Occidental confirmed that Berkshire could now buy up to 50% of common shares and didn’t comment further. A Berkshire Hathaway representative didn’t respond to a request for comment.
Mr. Buffett has invested billions in renewables such as wind-farm projects through Berkshire’s energy unit and has also added oil companies to the holding company’s portfolio in recent years.
Chevron Corp.
is now one of Berkshire’s largest stock investments.
Occidental has raked in high profits from elevated oil prices, netting $3.7 billion in the second quarter. The profits are a dramatic turnaround for the company, which lost around $14.8 billion in 2020 after the global pandemic gutted oil demand. Berkshire’s stock purchases, as well as that of the many investors who follow Mr. Buffett’s moves, have helped lift Occidental’s shares to the head of the broad rally in energy stocks.
Occidental’s ill-timed $38 billion deal to take over rival Anadarko Corp. in 2019 loaded the company with debt, leaving it in a perilous position as oil prices tumbled during the pandemic. Chief Executive
Vicki Hollub
made deep spending cuts over the past two years, moved to rein in growth and focused on using cash to pay down debt.
The company has repaid $8 billion in debt this year to bring it to $22 billion, down from nearly $36 billion a year ago, according to the company and analysts. Occidental’s endeavor to reach investment-grade status and its cash-generating capabilities have made it an attractive target for Mr. Buffett, said Neal Dingmann, an analyst with Truist Securities. “It’s a great sort of hedge against a lot of his other businesses to own such a high free-cash-flowing business,” he said.
Occidental has raked in high profits from elevated oil prices, netting $3.7 billion in the second quarter.
Photo:
Reuters Staff/REUTERS
Mr. Buffett has made no secret of his admiration for Ms. Hollub, describing her as one of the best executives in the business. In 2019, he acquired $10 billion in preferred stock to help the company pay for the Anadarko deal.
“What Vicki Hollub was saying made nothing but sense,” Mr. Buffett said at Berkshire’s annual shareholder meeting in April. Occidental looked like “a good place to put Berkshire’s money,” he added.
Mr. Buffett had to show his hand to the market because power plants controlled by both Occidental and Berkshire Hathaway feed the same grid in Louisiana. Occidental owns a power plant in Taft, La., that feeds its chemical plant next door. Leftover power is sold on the local grid, which Berkshire Hathaway Energy plants also feed.
FERC ruled that since Occidental’s plant accounts for just 0.48% of the capacity connected to the region’s grid, a combination with Berkshire “will not have an adverse effect on competition” in the local electricity market. Mr. Buffett had to ask, though, before beefing up Berkshire’s Occidental stake.
In recent years, Occidental has ventured into renewables through its Oxy Low Carbon Ventures unit. This new focus dovetails with Berkshire’s own investments in renewable energy and puts Mr. Buffett’s company in a position to benefit from tax breaks, said
Bill Smead,
chief investment officer at Smead Capital Management.
“We see Berkshire’s filing as a vote of confidence in the oil macro and the value proposition in energy equities,” said Kevin MacCurdy, a managing director at investment firm Pickering Energy Partners.
Write to Benoît Morenne at benoit.morenne@wsj.com and Ryan Dezember at ryan.dezember@wsj.com
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Warren Buffett’s Berkshire reports $44B loss as value of investments falls
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Warren Buffett’s Berkshire Hathaway reported a $43.76 billion loss in the second quarter as the value of the company’s investments plummeted, in what was a tumultuous quarter for the markets.
Berkshire said Saturday that a largely unrealized $53 billion decline in the value of its investments forced it to report a loss of nearly $44 billion, or $29,754 per Class A share. That is down from $28.1 billion, or $18,488 per Class A share, a year ago.
Buffett has long said he believes Berkshire’s operating earnings are a better measure of the company’s performance because they exclude investment gains and losses, which can vary widely quarter to quarter.
WARREN BUFFETT’S BERKSHIRE HATHAWAY TAKES CITIGROUP STAKE
By that measure, Berkshire’s earnings were up significantly to $9.28 billion, or $6,312.49 per Class A share from last year’s $6.69 billion, or $4,399.92 per Class A share.
Berkshire Hathaway CEO Warren Buffett (FBN)
Analysts covering Berkshire expected the company to report operating earnings per Class A share of $4,741.64.
Berkshire said its revenue grew more than 10% to $76.2 billion in the quarter as many of its businesses increased prices.
Berkshire’s many companies still performed well, suggesting the overall economy is weathering the pressure from inflation and rising interest rates.
BUFFETT-BACKED NUBANK BEATS REVENUE ESTIMATES ON STRONG CLIENT ADDITIONS
It was a rough quarter for shares of three of Berkshire’s biggest investments — Apple, American Express and Bank of America.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAPL | APPLE INC. | 165.35 | -0.23 | -0.14% |
| AXP | AMERICAN EXPRESS CO. | 157.51 | +0.64 | +0.41% |
| BAC | BANK OF AMERICA CORP. | 33.96 | +0.56 | +1.68% |
They all fell significantly during the second quarter, but rebounded during the third quarter, boosting the value of Berkshire’s portfolio since the end of the quarter.
A BNSF freight train with 76 container cars and FedEx freight trailers travels from Seattle to points east. ( (Photo by William Campbell/Getty Images) / Getty Images)
Besides investments, Berkshire owns more than 90 companies outright. Berkshire said operating profits were up at all of its major units, including its insurance companies, major utilities and BNSF railroad.
BUFFETT’S BERKSHIRE HATHAWAY BUYS EVEN MORE OCCIDENTAL SHARES
Berkshire did report a $487 million pretax underwriting loss at Geico, which reported bigger auto claims losses because of the soaring value of vehicles and ongoing shortages of car parts.
In this photo illustration, the Government Employees Insurance Company (GEICO) logo seen displayed on a smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images / Getty Images)
Berkshire is often seen as a microcosm of the broader economy because its collection of manufacturing, retail, insurance, utility and service businesses touches so many different industries, and Berkshire’s profits tend to follow whatever the economy is doing.
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Berkshire said it was sitting on $105.4 billion cash at the end of the quarter, which was little changed from the $106 billion it reported at the end of the first quarter.
The Associated Press contributed to this report.
Warren Buffett’s Berkshire reins in stock purchases and books $43.8bn loss
Warren Buffett’s Berkshire Hathaway dramatically slowed new investment in the second quarter after setting a blistering pace at the start of the year, as the US stock market sell-off pushed the insurance-to-railroad conglomerate to a $43.8bn loss.
Berkshire said on Saturday that the drop in global financial markets had weighed heavily on its stock portfolio which fell in value to $328bn, from $391bn at the end of March. The $53bn booked loss in the three months to June far outweighed an upbeat quarter for its businesses, which improved their profitability.
The company’s filing with US securities regulators showed its purchases of new stocks dwindled to about $6.2bn in the quarter, down from the $51.1bn it spent between January and March — a spurt that surprised Berkshire shareholders. Berkshire sold $2.3bn of stocks in the latest three-month period.
Berkshire also spent $1bn buying back its own shares in June, a commonly used tactic when Buffett and his investment team find fewer appealing targets in the market.
The 91-year-old investor signalled at the company’s annual meeting in Omaha in April that the spree of multibillion-dollar stock purchases was likely to slow as the year progressed, saying that the atmosphere in the company’s headquarters had become more “lethargic”.
Investors will get a more detailed update on how Berkshire’s stock portfolio has changed later this month, when the company and other big money managers disclose their investments to regulators. Separate filings show the company has increased its stake in energy company Occidental Petroleum in recent months.
Berkshire’s mammoth cash and Treasury holdings were little changed from the end of March, falling less than $1bn to $105.4bn.
While net income slid from a $5.5bn profit at the year’s start to a $43.8bn loss, operating income — which excludes the ups and downs of Berkshire’s stock positions — rose 39 per cent to $9.3bn. That included a $1.1bn currency-related gain on its non-US dollar debt.
Berkshire is required to include the swings in the value of its stock and derivatives portfolio as part of its earnings each quarter, an accounting rule that Buffett has warned can make the company’s earnings figures look “extremely misleading” and volatile.
The loss amounted to $29,754 per class A share. It stands in contrast to the $18,488 per share profit the company reported a year earlier.
Berkshire’s results are parsed by analysts and investors for signs of the health of the broader US economy, as its businesses cut across much of the country’s industrial and financial heart.
Inflationary pressures continued to bite, although many of its divisions were able to pass along higher prices to customers. The BNSF railroad, which Buffett has described as one of the “four giants” within Berkshire, reported a 15 per cent increase in revenue as fuel surcharges it levied on clients offset a drop in shipping volumes. Fuel costs for BNSF, which has over 32,500 miles of rail tracks across 28 states, jumped more than 80 per cent year-on-year.
Insurance unit Geico recorded a $487mn pre-tax underwriting loss in the quarter, up from the three months before. The division blamed the bigger loss on much higher prices for new cars and auto parts that it must pay when its clients are involved in accidents.
Buffett in April said the company was seeing the effects of inflation first hand, warning that it “swindles almost everybody”.
Berkshire’s housing businesses, including modular home unit Clayton Homes and home decor retailer Nebraska Furniture Mart, offered hints about how consumers were responding to higher prices and increased mortgage rates. Furniture sales were relatively flat, with higher prices compensating for lower orders.
Nonetheless there were signs of strength in the housing market, with new housing sales from Clayton up 9.8 per cent in the first half of the year. Revenues for the division rose 28 per cent to $3.4bn in the second quarter from a year earlier.
“The increases in home mortgage interest rates will very likely slow demand for new home construction, which could adversely impact our businesses,” Berkshire warned. “We also continue to be negatively affected by persistent supply chain disruptions and significant cost increases for many raw materials and other inputs, including energy, freight and labour.”
Berkshire addressed a potential conflict raised at the company’s annual meeting earlier this year. In June it spent $870mn to purchase shares that Berkshire vice chair Greg Abel, Buffett’s anointed successor, held directly in its energy unit.
Abel joined the company in 2000 when Berkshire acquired the utility MidAmerican Energy, and had held part of his wealth in that business instead of in shares of the Berkshire parent company.
Shares of Berkshire Hathaway’s class A common stock have fallen roughly 2 per cent this year, outperforming the 13 per cent drop in the benchmark S&P 500.
Warren Buffett’s final charity lunch sets eBay record
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Warren Buffett saved the best and biggest for last as the auction for lunch with the billionaire set a record.
A person bid more than $19 million to dine with the ‘Oracle of Omaha’ in the 21st and final time that the businessman auctioned a private lunch to benefit a San Francisco charity.
The winning bidder couldn’t immediately be identified.
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An eBay spokeswoman said the lunch was the most expensive item ever sold on the company’s website to benefit charity.
Berkshire Hathaway CEO Warren Buffett (Daniel Zuchnik/WireImage / Getty Images)
The winning bid in the eBay auction that ended on Friday night far topped the previous record of $4.57 million, paid in 2019 by cryptocurrency entrepreneur Justin Sun.
WARREN BUFFETT’S CHARITY LUNCH RETURNS, BUT FOR THE LAST TIME
The auction proceeds go to Glide, a nonprofit in San Francisco that helps the poor, homeless or those battling substance abuse.
Buffett, 91, the chairman and chief executive of Berkshire Hathaway has held 21 of the auctions, raising more than $53.2 million for the charity.
A general view of Smith & Wollensky steak and chops restaurant in New York City. (Photo by Ben Hider/Getty Images) ((Photo by Ben Hider/Getty Images) / Getty Images)
The COVID-19 pandemic prevented the lunches from being held in 2020 and 2021.
BUFFETT’S BERKSHIRE HATHAWAY BUYS EVEN MORE OCCIDENTAL SHARES
This year’s winner and up to seven guests will dine with Buffett at the Smith & Wollensky steakhouse in Manhattan.
It is said that during those lunches, Buffett will talk about anything but where he is investing next.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BRK.A | BERKSHIRE HATHAWAY INC. | 403,150.00 | -821.00 | -0.20% |
Previous winners of the auction are hedge fund managers David Einhorn and Ted Weschler.
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Weschler became a Berkshire portfolio manager. He paid a combined $5.25 million to win the 2010 and 2011 auctions.
Reuters contributed to this report.