Buffett's Berkshire faring better than the market in downturn

The major stock market indexes fell again today on Wall Street's growing concern the Federal Reserve will go too far with its anti-inflationary interest rate hikes and push the U.S. economy into a recession.

The Dow closed at a new low for the year, dropping below 30,000 and falling for a time into "bear market" territory, generally defined as a 20 percent drop from a high, before recovering a bit.

Berkshire Hathaway's stock has not been immune to Wall Street's downturn, but it hasn't dropped as much as the overall market.

And it's not even close, with the S&P down 22.5% year-to-date compared to declines of less than half that for the two classes of Berkshire.

In a Seeking Alpha post this week, Fishtown Capital writes that Berkshire's operating companies are generally more inflation-resistant than many others, because that's a key factor that Buffett looks for when he's acquiring.

He cites this quotation from Buffett's 2010 testimony to the federal commission that was looking into the causes of the 2008 financial crisis:

"The single-most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by a tenth of a cent, then you’ve got a terrible business. I’ve been in both, and I know the difference." 

Edward Jones upgrades Berkshire's stock to 'buy'

In the wake of a 6% drop for Berkshire's stock over the past month, Edward James analyst James Shanahan has raised his rating to "buy" from "hold" and added the stock to the firm's "U.S. Stock Focus List."

CNBC Pro quotes him as saying "the sell-off has created an attractive entry point for long-term investors, as Berkshire revenues and earnings benefit from a diverse group of operating companies and investments."

Two weeks ago, Meyer Shields at Keefe, Bruyette & Woods predicted the stock would be going down in the short-term.

It's down around 3% since that call. 

BUFFETT AROUND THE INTERNET

Some links may require a subscription

• Business Insider: Warren Buffett's Berkshire Hathaway made a $2 billion misstep by dumping Occidental stock then piling back in 18 months later

• Investor's Business Daily: LNG Stocks Hold Steady Ahead Of Warren Buffett Terminal Closure

• Barron's (subscription): Berkshire Made Big Bets on Citi, HP, and Paramount. They Look Like Losers.

• Bloomberg (subscription): Warren Buffett’s Granddaughter-in-Law Lili Joins JPMorgan Wealth

BERKSHIRE STOCK WATCH

BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Sep 23, 2022

Berkshire's top holdings of disclosed publicly-traded U.S. stocks, and BYD, by market value, based on today's closing prices.

Holdings are as of June 30, 2022 as reported in Berkshire Hathaway’s 13F filing on August 15, 2022, except for:

• Apple, Bank of America, Chevron, and U.S. Bancorp, which also include shares held as of June 30, 2022 as disclosed in New England Asset Management’s 13F filing on August 15, 2022
• BYD, which is as of September 1, 2022
• Occidental Petroleum, which is as of August 8, 2022

The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker.

QUESTIONS OR COMMENTS

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-- Alex Crippen, Editor, Warren Buffett Watch