Buffett’s Berkshire swings to rare loss
OMAHA (Reuters): Warren Buffett lost money but had a pretty good quarter.
Berkshire Hathaway Inc (BRKa.N) on Saturday reported an unusual quarterly net loss, the result of an accounting change that Buffett had warned would produce “wild” but in his view meaningless swings in results.
But Berkshire also ended a long stretch of disappointing operating performance, posting record operating profit as insurance rebounded from a difficult quarter while economic growth bolstered results in railroad, industrial and consumer businesses.
Berkshire posted a first-quarter net loss of $1.14 billion, or $692 per Class A share, compared with net income of $4.06 billion, or $2,469 per share, a year earlier.
The accounting change required Berkshire to report $6.2 billion of unrealized losses in its marketable stock portfolio, which totaled $170.5 billion at year end, regardless of whether it planned to sell those stocks.
Two of Berkshire’s biggest stock investments, Wells Fargo & Co (WFC.N) and Coca-Cola Co (KO.N), had tough first quarters, falling 13.6 percent and 5.3 percent, respectively.
Buffett has called the new accounting rule a “nightmare” that would produce “truly wild and capricious swings” in bottom-line results that could, depending on their direction, unnecessarily scare or embolden investors.