FRI, AUG 05, 2022
Earnings report will reveal how Berkshire fared as stocks fell
Berkshire Hathaway is scheduled to release its second-quarter financial results on its website tomorrow morning (Saturday) around 7am Central.
Bloomberg suggests the stock market's tumble over the first half of the year is "likely to take a chunk out of the company's stock portfolio and its own book value as a result."
It quotes Keefe Bruyette & Woods analyst Meyer Shields as saying, "We can look back at Berkshire’s portfolio and market moves and expect a pretty significant sequential deterioration" in book value.
While he doesn't think its a great way to value the company, many people do, so he believes "if book value shrinks, that will make the stock look less attractive."
The GEICO booth at the annual Berkshire Hathaway shareholder meeting in 2019. REUTERS/Scott Morgan
Bloomberg also notes that inflation could hurt Berkshire's operating businesses, with GEICO being especially at risk.
Other insurers have already reported they've been hit by big increases in the costs of claims.
But it's not just Berkshire's auto insurance business that may be suffering.
CFRA Research's Cathy Seifert tells Bloomberg, "The operating businesses are really a microcosm for the broader economy. They are diversified, but again, the diversification doesn’t necessarily insulate them from inflation because there’s really few sectors that are immune."
Barron's predicts investors will be interested in seeing if Berkshire was buying stocks as prices dropped during the quarter.
It notes that Berkshire bought around three million shares of Apple during the first quarter as the price fell into the $150s. In the second quarter, it went as low as $130.
Berkshire's buybacks of its own stock, which slowed in the first quarter, will also get attention.
Retail investors following Buffett into Occidental Petroleum
Occidental Petroleum's trading volume is getting a boost from the "Warren Buffett effect."
CNBC Pro reports that's the conclusion reached by analysts at VandaTrack.
"Ever since Berkshire Hathaway initially revealed a $5 billion stake in the oil giant, the stock has witnessed a massive 16.5-time increase in average daily net flows from retail investors — from $500,000 per day to $8.25 million a day."
This week, Occidental reported profits that beat Wall Street's expectations, used some of all the cash rolling in from higher oil prices to pay down $4.8 billion in debt from its 2019 Anadarko Petroleum acquisition, and announced a $3 billion stock buyback program.
The headline of The Wall Street Journal's "Heard on the Street" column on Wednesday was "Warren Buffett Loves Occidental. Should You?"
After listing a number of advantages Berkshire gets from the preferred shares it holds along with its common stock stake, and noting the stock has already more than doubled so far this year, it concludes, "There may still be value to be found in Occidental, but investors looking to pick up the stock should do so with the full knowledge that Berkshire has already picked up the best bits."
BUFFETT AROUND THE INTERNET
Some links may require a subscription
BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Aug 5, 2022
Berkshire's top holdings of disclosed publicly-traded U.S. stocks by market value, based on today's closing prices.
Holdings are as of March 31, 2022 as reported in Berkshire Hathaway’s 13F filing on May 16, 2022, except for Apple, Bank of America, and U.S. Bancorp, which also include shares held as of Mar 31, 2022 as disclosed in New England Asset Management’s 13F filing on May 14, 2022, and except for Occidental Petroleum, which is as of July 18, 2022.
In addition to U.S. stocks, shares held as of December 31, 2021 of China's BYD, as listed in Buffett's 2021 letter to shareholders, are included. The price of those shares in U.S. trading is used to approximate the current market value of the position. The value of the stake as a percentage of the company's market value is fixed at what was listed as of December 31, 2021 in the letter.
The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.
Please send any questions or comments about the newsletter to me at email@example.com. (Sorry, but we don't forward questions or comments to Buffett himself.)
If you aren't already subscribed to this newsletter, you can sign up here.
-- Alex Crippen, Editor, Warren Buffett Watch