Warren Buffett’s Berkshire Hathaway slowed its pace of new investment significantly in the second quarter after its blistering pace at the start of the year, as a sell-off in the U.S. stock market pushed the railroad insurance conglomerate to a loss of $43.8 billion in the three months to June.
Berkshire said on Saturday that the decline in global financial markets had taken a heavy toll on its equity portfolio, which fell in value to $328 billion from $391 billion at the end of March. The recorded loss of $53 billion more than offset an upbeat quarter for its business, which improved profitability.
The company’s filing with U.S. securities regulators showed its purchases of new shares declined to around $6.2 billion in the quarter, from $51.1 billion spent between January and March – a push that surprised Berkshire shareholders. Berkshire has sold $2.3 billion worth of stock in the past three months.
Berkshire also spent $1 billion buying back its own shares in June, a tactic commonly used when Buffett and his investment team may find fewer attractive targets in the market.
The 91-year-old investor signaled at the company’s annual meeting in Omaha in April that the multibillion-dollar stock-buying spree was likely to ease as the year progressed, saying the atmosphere at 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 documents show that the company has increased its stake in energy company Occidental Petroleum in recent months.
Investments in the quarter mean that Berkshire’s gigantic cash and Treasury holdings have changed little since the end of March, falling by less than $1 billion to $105.4 billion.
While net profit fell from a profit of $5.5 billion at the start of the year to a loss of $43.8 billion, operating profit – which excludes the ups and downs of positions in Berkshire shares – rose 39% to $9.3 billion.
Berkshire is required to include fluctuations in the value of its stock and derivatives portfolio in its earnings each quarter, an accounting rule that Buffett says can make the company’s earnings numbers “extremely misleading.”