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Berkshire Hathaway Posts Loss of $50 Billion in First Quarter

Warren Buffett’s Berkshire Hathaway posts a record loss of $50 billion as the impact of the coronavirus pandemic ravaged the value investment manager’s holdings.

Warren Buffett’s Berkshire Hathaway  (BRK.A) - Get Report  (BRK.B) - Get Report on Saturday reported a record first-quarter loss of $50 billion as the impact of the coronavirus pandemic on the economy ravaged the value of the well-known investment manager’s holdings.

The Omaha, Nebraska-based company’s first-quarter net loss totaled $49.75 billion, or $30,653 per Class A share, reflecting $54.52 billion in losses from investments, mainly common stocks. That compared to year-earlier net earnings of $21.66 billion, or $13,209 a share.

Quarterly operating profit, which Buffett considers a better performance measure as it takes into account operational costs and other factors, rose 6% to $5.87 billion from $5.56 billion, the company said. 

Cash on hand, meantime, totaled a record $137 billion as of March 31, up almost $10 billion from the end of 2019. 

"As efforts to contain the spread of the Covid-19 pandemic accelerated in the second half of March and continued through April, most of our businesses were negatively affected, with the effects to date ranging from relatively minor to severe," the company said in its quarterly filing with the Securities and Exchange Commission.

Berkshire painted a solemn picture of how its portfolio was impacted in the final weeks of March as the full impact of the pandemic on the U.S. economy came to be realized by financial markets - and by Berkshire's conglomerate of companies.

"Several of our businesses deemed essential have continued to operate, including our railroad, utilities and energy, insurance and certain of our manufacturing, distribution and service businesses. However, revenues of these businesses have slowed considerably in April," Berkshire said.

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However, "Other businesses, including several of our retailing businesses and certain manufacturing and service businesses are being severely impacted due to closures of facilities where crowds can gather, such as retail stores, restaurants, and entertainment venues," it added. 

Berkshire Hathaway runs a large insurance operation as well as railroad, utilities, industrial manufacturers and retailers. Its holdings include household names like Dairy Queen, Duracell, Fruit of the Loom and Geico as well as stakes in Apple  (AAPL) - Get Report and Wells Fargo  (WFC) - Get Report, among others.

Despite some high-profile stock purchases and sales at the height of the market volatility in March, including buying and selling Delta Air Lines  (DAL) - Get Report and Southwest Airlines  (LUV) - Get Report, Berkshire bought only $1.8 billion of stocks on a net basis in the January-March period. The investment firm spent a net $3.5 billion buying shares of its and other companies.

Berkshire also scaled back in stock buybacks in the first quarter, repurchasing just $1.7 billion. It spent a record $2.2 billion on buybacks during the last three months of 2019.

While the company joined others globally to temporarily lay off or furlough non-essential workers and continue business operations via work-from-home efforts, "we cannot reliably predict when business activities at our numerous and diverse operations will normalize. We also cannot predict how these events will alter the future consumption patterns of consumers and businesses we serve."

Buffett will host Berkshire’s annual meeting virtually on Saturday, starting at 3:45 p.m. ET in Omaha with key deputy Greg Abel. Charlie Munger, Buffett’s longtime business partner, won’t take part in the meeting.

The company’s Class A shares closed Friday at $343,499, up 1.1% for the year. In contrast, the S&P 500 is up 3.3% this year.