Warren Buffett is facing an ironic situation – the share price of the world’s best known and successful investor, Berkshire Hathaway is being outperformed by his own company’s share portfolio.
The Berkshire Hathaway’s March quarter report shows that the company’s big investment portfolio is doing a lot better than the Berkshire share price which is also being outperformed by the wider market.
Berkshire Hathaway’s share price fell in the first three months of this year – down 0.9% while the S&P 500 was up 10% and the value of the Berkshire portfolio jumped 10.8%.
Berkshire’s shares have done better since then – they are up 7.1% to last Friday’s close year to date (meaning a solid rise since April 1, but the S&P 500 is up more than 13%.
With the rise in Apple’s share price since the end of March, it is likely the value of the Berkshire portfolio has also improved noticeably, but we do not have up to date data.
Berkshire’s portfolio was valued at $US191.771 billion at the end of March this year, up from $US172.757 billion at the end of December.
But the rise from the first quarter of 2018 is far more noticeable – up to $US25.1 billion or just over 15% – from $US166.658 billion to $191.771 billion.
The March 31 filing shows the rise in value in Berkshire biggest investments.
The value of the largest holding – Apple – was $US48.5 billion at the end of March, against $US40.7 billion at March 31, 2018. The Amex stake rose to $US16.6 billion from $US14.1 billion, the stake in Bank of America jumped to $US25.4 billion from$US21 billion. Even the value of the Coca Cola Co saw a small rise – from $US17.4 billion to $US18.7 billion.
The big loser was Wells Fargo. Berkshire has been selling its shares and that has helped the value slide 20% to $20.9 billion from $US25.2 billion.
We know Amazon will be a new stock appearing in the company’s 13F filing with the US Securities and Exchange Commission this year (perhaps on May 15 for the March quarter report).
The surge in capital gains on the share portfolio is a big deal for Berkshire and its shareholders. New accounting rules mean the company has to account for rises in falls in the value of the investment portfolio each quarter.
In the March 2019 quarter, it was $US16.1 billion in after-tax investment and derivative gains compared to after-tax losses of $6.4 billion in 2018. That’s why quarterly earnings were $US21.6 billion against a loss of $US1.4 billion a year ago.
