Due to a reduction in the paper value of its investments, Berkshire Hathaway, the holding company of billionaire businessman Warren Buffett, had its net profit plummet by 53% in the first quarter.
The news came as the company prepared for its much-anticipated annual shareholder meeting in Omaha, Nebraska, on Saturday, its first in-person meeting since the Covid-19 outbreak.
Thousands of shareholders from around the world attend the event, nicknamed a “Woodstock for Capitalists,” to hear Buffett’s investment expertise. Buffett, 91, is known among investors as the “Oracle of Omaha.”
Berkshire Hathaway reported net profits of $5.5 billion, a significant decrease from the $11.7 billion reported the year before.
Operating profits of companies owned by the conglomerate — ranging from insurance companies to energy providers and even frozen desserts — remained essentially unchanged, at $7.04 billion.
A drop in profits from insurance companies was compensated by profits from rail lines, energy firms, manufacturing, services and retail sales, said a statement from Berkshire Hathaway.
However, the value of its investments, which can fluctuate significantly from quarter to quarter, plummeted during the year’s market downturn, resulting in a $1.58 billion paper loss.
Buffett frequently tells his stockholders to ignore any good or negative quarterly changes.
Shares in American Express, Apple, Bank of America, and Chevron are among Berkshire’s most valuable holdings.
Berkshire shares have held their value well, climbing 7% since the beginning of the year, while the S&P 500 index, which represents the 500 largest publicly-traded companies on Wall Street, has lost more than 13%.
Berkshire Hathaway looks to have taken advantage of declining stock prices to buy some bargains, spending more than $51 billion to diversify its holdings. It sold shares worth $10 billion over the same period.
Shareholders will get the opportunity to ask Buffett, the company’s CEO, and his even older right-hand man, 98-year-old Charlie Munger, questions during the meeting on Saturday.
Vice president Greg Abel, who is Buffett’s intended successor at 59, and corporate executive Ajit Jain will join them.
