If any investor has stood the test of time, it is Warren Buffett. For years, the “Oracle of Omaha” has had a rock-star-like presence in the investing world. His annual Berkshire Hathaway shareholders meeting draws literally thousands of loyal fans who are investors. Known for his long buy-and-hold strategies and his massive portfolio of public and private holdings, he remains one of the preeminent investors in the entire world.
Despite all the praise for his investing prowess over the past half a century, and the success has been well documented, not even Buffett can ride home a winner when a rate- and inflation-driven bear market hits the stock market. In a somewhat unusual move, Berkshire Hathaway reported earnings last Saturday, and while faring better this year than other companies and indexes, some large parts of the portfolio were stomped.
Buffett, who is a self-proclaimed lover of the insurance industry, saw his insurance underwriting division post a stunning $962 million loss, with car insurance giant Geico taking the biggest pretax hit, down a massive $759 million. Geico has not had a profitable quarter since the second quarter of 2021.
Overall, Berkshire Hathaway posted a huge $2.7 billion net loss for the quarter, which compared to a gain of $10 billion profit in the same quarter of 2021. There was a gigantic $10.4 billion hit to the overall investment portfolio as a volatile roller-coaster stock market laid the same one-two punch on Buffett and his team that most investors have experienced. The saving grace for the overall portfolio is that earnings of $7.76 billion for the third quarter was a 20% increase over last year, and year-to-date earnings increased 19% over the same period in 2022.
So how did earnings for the quarter come in better and why is Berkshire Hathaway only down about 10% for 2022, versus the S&P 500 loss of over 21%? Two gigantic energy stocks helped buoy the rest of the portfolio. The fact Berkshire Hathaway had such a massive position in these two was a difference maker for sure. Both are “Strong Buy” rated across Wall Street, but it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This integrated giant is a safer way for investors looking to get positioned in the energy sector, and Warren Buffett owns a stunning 163,532,129 shares, or almost 9% of the company. Chevron Corp. (NYSE: CVX) engages in integrated energy and chemicals operations worldwide.
The Upstream segment is involved in the exploration, development, production and transportation of crude oil and natural gas; processing, liquefaction, transportation and regasification associated with liquefied natural gas; transportation of crude oil through pipelines; and transportation, storage and marketing of natural gas, as well as operating a gas-to-liquids plant.
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