Berkshire Hathaway’s stock portfolio is down about $65 billion so far this quarter

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Warren Buffett’s Berkshire Hathaway wasn’t long on its own shares in April, but that could have changed with the recent market decline.

Paul Morigi/Getty Images for Fortune/Time Inc.

Berkshire Hathaway
it is

the equity portfolio takes a hit of $65 billion so far in the second quarter, led by losses in

Apple
,

Bank of America

and

American Express
,

Barron’s estimates.

Paper losses so far this quarter are manageable for Warren Buffett’s big conglomerate, given its formidable balance sheet with over $100 billion in cash and cash equivalents at the end of March, and a projected net profit of 30 billion dollars at the beginning of this year.

Berkshire Hathaway’s stock portfolio (ticker BRK.A, BRK.B) totaled $390 billion at the end of the first quarter and about $400 billion, including a stake in

Kraft-Heinz

(KHC), which receives a different accounting treatment. The estimated decline in portfolio value of about 16% roughly matches the percentage decline in the S&P 500 since March 31.

Apple (AAPL) accounts for the bulk of paper losses, with shares of the iPhone maker down about 25% at $131.88 so far in the second quarter. Berkshire owned more than 900 million Apple shares at the end of the first quarter. Berkshire is still sitting with a big gain of about $85 billion in its Apple stake, for which the company paid an average of about $34 per share.

Bank of America (BAC), the No. 2 position in the Berkshire portfolio, is down 22% so far this quarter at $32.02 per share. Farms n°3 and n°4,

Chevron

(CLC) and

Coca Cola

(KO), were little changed this quarter while American Express Number 5 (AXP) was down 22% at $131.88.

Berkshire shares have been under pressure lately, with the Class A stock falling 3.7% to $423,700 on Monday and 22% from its high in late March. Berkshire’s Class B stock ended Monday at $281.56, down 3.5%.

Barrons estimates that Berkshire’s book value, or equity per share, should end the current quarter at about $315,000 per Class A share, down about 9% from the March 31 figure of $345,000. This assumes no change in the value of the portfolio by June 30.

The decline reflects a lower equity portfolio, which will impact Berkshire’s income statement, partially offset by the company’s operating profits, which are expected to total approximately $8 billion after tax for the current period. . CEO Buffett, 91, regularly tells investors to focus on operating profits and not the impact of changes in the value of the stock portfolio on earnings.

Berkshire is trading at 1.35 times our current book value estimate, which is around the middle of its valuation range in recent years. The stock reached 1.5 times book value in late March and traded as low as 1.1 times book value in May 2020.

Berkshire is offering a bet on a stock market rally and what has boosted the earnings power of a diverse group of companies led by the Burlington Northern Santa Fe Railroad, Berkshire Hathaway Energy (one of the largest utilities electricity utilities in the country), auto insurer Geico, and a major reinsurance company.

It will be interesting to see if Buffett and his two investment lieutenants, Todd Combs and Ted Weschler, have continued their stock-buying spree in the current quarter after buying more than $50 billion worth of stock in the first quarter — including a big expansion of a stake in Chevron, which totaled $25.9 billion as of March 31.

Berkshire watchers will also be keen to see if Buffett ramped up Berkshire’s stock buyback program in the current quarter after it slowed in the first quarter to around $3 billion – less than half the pace. quarterly of 2021 – as the stock price rose.

Buffett told Berkshire’s annual meeting that the company was not a buyer of its shares in April, but that may have changed as the stock has fallen in recent weeks. Buffett said Berkshire would be price sensitive in its takeovers, and it has been. Investors see the buybacks as a sign of Buffett’s enthusiasm for the stock.

Write to Andrew Bary at [email protected]

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