Warren Buffett emulates the Swiss National Bank

Warren Buffett Berkshire Hathaway Investmentstar Legende Börse
Losses in the capital markets are reflected in the results. (Image: Maxim Hopman / unsplash)

Warren Buffett has presented the results for the third quarter from his holding Berkshire Hathaway. And the losses are horrendous.

Investor legend Warren Buffett announced the latest results of his holding company Berkshire Hathaway over the weekend. In the third quarter alone, the loss was 2.6 billion dollars after a profit of 10.6 billion dollars in the same quarter last year.

In particular, investments and speculative assets lost a lot of value and these had to be written down.

There was a loss of around 13.5 billion dollars on this item from July to September alone. In the corresponding period of the previous year, there had still been a gain of 4.9 billion dollars.

Incredible amounts

Cumulatively over the first nine months, net income dropped completely into the basement. The result was a net loss of an incredible 40.4 billion dollars. In the three quarters of the previous year, a profit of 50.9 billion dollars had resulted.

So that’s a difference of around dollars. Investment and derivative losses from January to September amounted to 82.4 billion dollars. So the star investor did not have such a good hand after all, as is widely believed.

In the three quarters of the previous year the holdings still showed a profit of 38.0 billion dollars.

Shrinking equity

When losses are this high, investors quickly turn their attention to equity. Equity fell from 515 billion dollars at the end of 2021 to 464 billion dollars today. That is 51 billion dollars or ten percent less equity in just nine months.

All this is likely to remind observers of the quarterly results of the Swiss National Bank SNB, which muula.ch recently reported on, and which were also accompanied by strong devaluations in capital investments. There is probably nothing left for SNB and Buffett to do but hope for better times and sit out the losses.

Words of appeasement

As an example to Berkshire Hathaway, the share of Kraft Heinz alone lost about a billion in value in the “fair value”, i.e. the valuation on the books, since the end of 2021 and is now sitting at 10.9 billion dollars.

Once again, as in the half-year report, there is no mention of the fact that both realized and unrealized capital market losses are meaningless when viewed on a quarterly basis.

These figures cannot be used to analyze the past or the future, the report carefully added.

Swiss Re and Munich Re ahead

Hurricane Ian hit reinsurers hard. Star investor Buffett, who is active in the reinsurance business, was also affected. His holding company reported losses of 3.4 billion dollars. Swiss Re was hit with around 1.3 billion dollars.

Market leader Munich Re estimated its losses at 1.6 billion dollars. Warren Buffett thus had to dig deeper into his ‘minus bag’.

Operationally, however, things were otherwise not bad at all for Berkshire Hathaway in the third quarter, as can be seen not from the formal quarterly reporting, but from an accompanying media release without legal binding.

Investment in itself

Operating income increased about 20 percent to 7.8 billion dollars in the third quarter, or 19.4 percent to about 24.1 billion dollars in the first three quarters of 2022.

At least Buffett thinks he did everything right and is investing heavily in his own holding company. Share buybacks totaled 1.05 billion dollars in the third quarter alone. And overall, the stock market guru has already invested 5.25 billion dollars this year in buying up his own stocks.


Warren Buffett emulates the Swiss National Bank

Leave a Reply

Your email address will not be published. Required fields are marked *