Not Even the Oracle of Omaha, Warren Buffett is Immune to Market Volatility
Shares of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), after reaching an all-time high in March of $544,389.30 and $362.10, respectively, BRK.A and BRK.B have corrected sharply and now sit approximately 12% off the highs.
As a holdings company primarily, Berkshire Hathaway typically follows the moves of its largest holdings. Unfortunately, Buffett & Co. made Apple (NASDAQ: AAPL) the firm’s largest holding, accounting for over 40% of Berkshire Hathaway’s portfolio. During this downturn, Apple has fared a bit better than some of the other large tech stocks, but it is still down over 16% YTD.
Berkshire Hathaway’s other significant holdings have not fared much better; Bank of America (NYSE: BAC) is down 21% YTD, and American Express (NYSE: AXP) is down 3.7% YTD. The portfolio was buoyed by Coca-Cola (NYSE: KO), which is up 9.6% YTD, and Kraft Heinz (NYSE: KHC), which is up 23.3% YTD. Before the correction, Berkshire Hathaway beat the overall market by a substantial amount. After the correction, due to Berkshire Hathaway’s outsized position in Apple, the stock is now trading much closer to the S&P 500 index.
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Also Read: Big Tech Earnings Recap – Winners & Losers
Berkshire Hathaway’s Q1 2022 earnings report did not blow analysts away but was still positive, considering the macro environment. The company reported a solid, if unspectacular, revenue growth of 9.6% from the prior-year period. Unfortunately, net income (-53%) and profit margin (-57%) suffered as the revenue growth was insufficient to make up for increased costs and a decrease in value for many of its holdings.
Perhaps the brightest spot for investors is that Buffett has not been sitting on his hands as the market corrects. The man who tells investors to be greedy when others are fearful has been putting his money where his mouth is and buying up companies that have dipped. Buffett has upped his position in Apple by over $600 million and has played the arbitrage gap on Activision Blizzard (NASDAQ: ATVI), which is currently trading at about a 20% discount from Microsoft’s (NASDAQ: MSFT) buyout offer price.
In total, Berkshire Hathaway invested $42 billion in the quarter. Time will tell if these were prudent buys or if Buffett started investing too early.
Shares of Berkshire Hathaway’s BRK.A is currently changing hands at $471,887.50 per share, up +0.45% on the day. BRK.B stock last traded at $314.20, up +0.61% today. YTD BRK.A and BRK.B shares are up +3.87% and +4.46%, respectively.
Learn more about Berkshire Hathaway: Website | Investor Deck | BRK.A Chart | BRK.B Chart
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Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.
