A Tough Investing Quarter For Everyone -- August 7, 2022

Analysis: Forbes. Link here.

Berkshire Hathaway (BRK-A / BRK-B) slipped to a loss of over $43.7 billion in the second quarter versus a profit of over $28 billion in the same quarter of 2021. 

Thanks to sharp declines in the stock market, that result is dominated by losses from the investment portfolio since unrealized gains from their portfolio are included in earnings. 

Operating earnings, which remove the distortion from market changes and better reflect the firm’s earnings power, for the quarter rose sharply by 39% versus 2021. 

Year-to-date operating earnings rose by 19% over the same period in 2021. Providing an illustration of the value from share repurchases, per-share operating income for the second quarter increased by 43% versus 2021.

Because the Covid-19 pandemic negatively impacted most businesses, including Berkshire, in early 2020, comparing current results to pre-pandemic 2019 results is helpful. Operating earnings for the second quarter of 2022 are 51% above 2019. And thanks to share repurchases, operating earnings per share are a whopping 68% above 2019.

But, bought on the dip: 

Berkshire was a net buyer of equities in 2Q by $3.8 billion, or $45.2 billion in 2022, vs. a $16 billion net seller in 2020-21. 

We think this may continue and doesn’t necessarily signal Buffett is bearish on his own shares; buybacks have historically been a lower priority use of capital. Repurchases of $1 billion in 2Q declined from the 2021 pace of about $7 billion a quarter.”

Berkshire Hathaway's 2Q22 earnings, link here:

• The conglomerate’s operating earnings totaled $9.283 billion in the second quarter of 2022, marking a 38.8% increase from a year ago.
• However, the company posted a $53 billion loss on its investments during the quarter.
• Warren Buffett again asked investors to not focus on the quarterly fluctuations in its equity investments.

The conglomerate’s operating earnings — which encompass profits made from the myriad of businesses owned by the conglomerate like insurance, railroads and utilities — totaled $9.283 billion in the second quarter of 2022, Berkshire reported Saturday morning. It marked a 38.8% increase from the same quarter a year ago.

Let's see: that would be:

• BNI