Warren Buffett’s Berkshire reins in stock purchases and books $43.8bn loss

Warren Buffett’s Berkshire Hathaway dramatically slowed its pace of new investments in the second quarter after its blistering pace at the start of the year, as a sell-off in the US stock market pushed the insurance-to-railroad conglomerate to a $43.8bn loss in the three months to June.

Berkshire said on Saturday the drop in global financial markets had weighed heavily on its stock portfolio which fell in value to $328bn, from $391bn at the end of March. The $53bn booked loss far outweighed an upbeat quarter for its businesses, which improved their profitability.

The company’s filing with US securities regulators showed its purchases of new stocks dwindled to about $6.2bn in the quarter, down from the $51.1bn it spent between January and March — a spurt that surprised Berkshire shareholders. Berkshire sold $2.3bn of stocks in the latest three-month period.

Berkshire also spent $1bn buying back its own shares in June, a commonly used tactic when Buffett and his investment team can find fewer appealing targets in the market.

The 91-year-old investor signalled at the company’s annual meeting in Omaha in April that the spree of multibillion-dollar stock purchases was likely to slow as the year progressed, saying that the atmosphere in 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 filings show the company has increased its stake in energy company Occidental Petroleum in recent months.

The investments in the quarter meant Berkshire’s mammoth cash and Treasury holdings were little changed from the end of March, falling less than $1bn to $105.4bn.

While net income slid from a $5.5bn profit at the year’s start to a $43.8bn loss, operating income — which excludes the ups and downs of Berkshire’s stock positions — rose 39 per cent to $9.3bn.

Berkshire is required to include the swings in the value of its stock and derivatives portfolio as part of its earnings each quarter, an accounting rule that Buffett has warned can make the company’s earnings figures look “extremely misleading”.