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Berkshire Hathaway Posts Massive $43.8 Billion Loss;  operating results are improving

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Aug 6 (Reuters) – Falling U.S. stock prices punished Berkshire Hathaway Inc. net income in the second quarter, with the company run by billionaire Warren Buffett posting a loss of $43.8 billion.

Berkshire nevertheless posted better operating results, as improved results from reinsurance and the BNSF railroad offset a loss from auto insurer Geico, where auto parts shortages and rising vehicle prices inflated claims losses.

Rising interest rates helped Berkshire’s insurance units generate more cash from investments, while the strengthening US dollar boosted earnings from the company’s investments in European and Japanese debt.

Investors are watching Berkshire closely because of Buffett’s reputation and because the results of his dozens of operating units in insurance, railroad manufacturing, energy and retail often reflect broader economic trends.

Berkshire’s net loss was $29,754 per Class A share, and compared with net income of $28.1 billion, or $18,488 per Class A share, a year earlier.

Quarterly operating profit rose 39% to $9.28 billion, or about $6,326 per Class A share, from $6.69 billion, or $4,424 per Class A share, a year earlier.

Berkshire has slowed buybacks of its own shares, repurchasing $1 billion in the quarter and $4.2 billion so far this year.

It also bought more than $6.1 billion in stock, up from $51.1 billion in the first quarter, when it took large stakes in oil companies Chevron Corp. and Occidental Petroleum Corp.

Berkshire ended June with $105.4 billion in cash and cash equivalents. It plans to complete its $11.6 billion takeover of insurance company Alleghany Corp in the fourth trimester.

The bottom line fluctuates wildly because the Omaha, Nebraska-based conglomerate has to report investment gains and losses on its stock holdings, even if it doesn’t buy or sell anything.

That proved a drag in the second quarter, as Berkshire recorded $53 billion in investment and derivatives losses.

The shares of three major holding companies — Apple Inc Bank of America Corporation and American Express Co. – each fell more than 21%.

Buffett urges investors to ignore fluctuations, and Berkshire will make money if stocks rise over time.

In 2020, for example, Berkshire lost nearly $50 billion in the first quarter as the COVID-19 pandemic took hold, but gained $42.5 billion for the full year.

Berkshire has dozens of companies that also include its namesake energy business, several manufacturing companies, and consumer companies such as Duracell batteries, Fruit of the Loom underwear, and See’s Candies.

Shares of the company outperformed the broader U.S. market in 2022, falling 2% from a 13% decline in the Standard & Poor’s 500. (Reporting by Jonathan Stempel in New York; editing by Jason Neely and Diane Craft ) ((; +1 646 223 6317; Reuters Mail: Keywords: BERKSHIRE RESULTS/ (UPDATE 2, PIX)

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