Berkshire Hathaway saw the market value of its investment portfolio fall sharply in the second quarter due to the sharp fall in the stock markets.
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The investment company of American investor Warren Buffett has its second quarter results published. Berkshire Hathaway
reported a huge net loss of $43.8 billion (EUR 43 billion), compared to a profit of $28.1 billion in the second quarter of last year.
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That loss is solely due to unrealized capital losses of $53 billion on the equity portfolio. Those losses reflect the sharp fall in the equity markets in the second quarter. They are in stark contrast to unrealized capital gains of $21.4 billion in the same period last year.
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Operating profit
The net loss was smaller than capital losses as Berkshire posted an operating profit of $9.3 billion, compared to $6.7 billion last year. This operating profit does not take into account the evolution of the stock market prices of the shares held. The increase in operating profit is mainly due to exchange rate gains on foreign currency debt and better results of the insurance business. Most currencies fell against the dollar.
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We believe that gains and losses on the equity and derivatives portfolio generally have no relevance to the economic performance of our business.
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Buffett believes investors should look at operating earnings best, since accounting rules require unrealized capital gains and losses to be included in net income. We believe that gains and losses on the equity and derivatives portfolio generally have no relevance to the economic performance of our business.
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less fanatical
Striking: Berkshire was less fanatical about the purchase of its own shares. The holding company purchased $1 billion of its own shares, compared to $3.2 billion in the first quarter. In the second quarter, Berkshire mainly drove its stake in oil group Occidental Petroleum
to 17 percent at the end of June, and since then that stake has risen further to 19 percent. Due to the aggressive purchases of Occidental Petroleum, there is sometimes speculation about a takeover bid by Berkshire.
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The holding company’s cash position stood at $105.4 billion at the end of June, compared to $106.3 billion at the end of March.
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