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Wednesday, March 22, 2023

It is no longer so unbeatable: Warren Buffett’s company lost $ 22,000 million in 2022

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The accounts of Buffett’s firm have been especially volatile since 2018 due to an accounting standard that came into force then and that requires including the change in the value of shares in his possession, which given his huge portfolio causes large movements depending on the direction of the markets.

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The famous investor, who is very critical of those accounting rules, always points to operating profits as a more reliable way to see the progress of his company.

Every year, his company’s statement typically contains a warning to this effect: “The amount of investment gain/loss in a given quarter is often meaningless and yields net earnings (loss) per share figures that may be very misleading for investors with little or no knowledge of accounting standards”.

Based on these operating benefits, Berkshire Hathaway obtained a profit in 2022 of US$30,793 million, 12.15% more than the 27,455 million registered in 2021.

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Following this logic, in the last quarter of 2022, the investment company posted operating profits of 6,709, 7.9% less than the 7,285 million dollars obtained between October and December 2021.

In a letter from Buffett to investors, he assures that “Berkshire will always hold a large amount of cash and US Treasury bills along with a wide range of businesses.”

“We will also avoid behavior that could lead to uncomfortable cash needs at inopportune times, including unprecedented financial panics and insurance losses,” said the investor, known in the financial world as the Oracle of Omaha.

In the statement, the company noted that approximately $2.6 billion was used to repurchase Berkshire shares in the fourth quarter, bringing the total for the year to about $7.9 billion in purchases of the company’s own stock in the first nine months of the year.

Source: Ambito

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