Buffett's holding profits halved amid COVID-19 and geopolitics

Berkshire Hathaway recorded a drop in first-quarter net income of more than 50%.The company also suffered a significant loss from investments in the stock market and significantly increased its investment in Chevron Berkshire Hathaway shares.BRK B $324 -1,74% Buy

The net profit of the financial conglomerate Berkshire Hathaway in the first quarter of 2022 fell by 53.4% ​​compared to the same period in 2021, to $5.46 billion. Operating profit, reflecting the results of various businesses included in the holding, remained almost unchanged and amounted to $7 .04 billion ($7.02 billion a year earlier).

In its first quarter reporting, Berkshire attributed its results to the impact of covid-19 , as well as the development of geopolitical conflicts in 2022. “Furthermore, the development of geopolitical conflicts in 2022 has contributed to supply chain disruptions, driving up the prices of raw materials, goods and services in many parts of the world. The long-term economic impact of these developments cannot be reasonably estimated right now,” the company said.

Buffett's company suffered a significant loss - $ 1.58 billion - on investment operations. At the same time, Buffett repeatedly reminded shareholders that "an analysis of the profits or losses received from investing activities in a single quarter usually does not make sense."

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As of March 31, 66% of the portfolio value was accounted for by securities:

APPLE — $159.1 billion; Bank of America - $42.6 billion; American Express - $28.4 billion; Chevron — $25.9 billion

Warren Buffett buys $4 billion in stagnant HP shares

At the same time, investments   in Chevron were significantly increased during the quarter - if on December 31, 2021 this package was estimated at $4.49 billion, then in the first quarter of 2022 it already amounted to $25.9 billion.

These indicators reflect the general situation in the US economy - in the first quarter of 2022, US GDP decreased by 1.4% in annual terms, while the DOW JONES forecast, which was considered conservative by the American media, assumed growth by 1%. The slowdown in economic activity in the country was due to a variety of factors, including an increase in the number of infections with a new strain of COVID-19 "omicron", the highest inflation since the 1980s, and events in Ukraine.

Throughout 2021, Buffett continued to buy back Berkshire shares from the market, with analysts criticizing him for his lack of new ideas. In the first quarter, the volume of buybacks fell to $3.2 billion, although in the fourth quarter of 2021 it was $6.9 billion. According to BLOOMBERG, this may be due to the dynamics of Berkshire shares, which were no longer as cheap as before. Since the beginning of the year Berkshire's class A shares have risen in price by 7.47% and reached $484.34 thousand. The cost of class B shares increased by 7.97% to $322.83 per share.

Berkshire's cash cushion was $106 billion, the lowest since the third quarter of 2018. At the end of March, Buffett's holding acquired Alleghany investment company for $11.6 billion, at $848.02 per share. Also, Berkshire Hathaway bought 136.4 million shares of the oil company Occidental Petroleum, or almost 14.6% of all its papers in circulation. 

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