(News Bulletin 247) – Berkshire Hathaway, the investment company chaired by the famous billionaire, suffered losses of more than 50 billion dollars on its equity investments last year.

The action of Berkshire Hathaway, the investment company of Warren Buffett, made resistance in 2022. Last year, the title gained 4% when the S&P 500, dividends reinvested, fell 18.1% over the same period.

The annual accounts of the company chaired by the “oracle of Omaha” have not been spared by the plunge in the equity markets. Thus, Berkshire Hathaway suffered a total loss of 22.82 billion dollars (21.6 billion euros) last year, against a profit of nearly 90 billion in 2021.

This significant deficit is explained by the heavy losses recorded in respect of the company’s stock market investments, which amounted to 53.61 billion dollars, compared with a profit of 62.34 billion dollars in 2021. These amounts correspond changes in market prices on Berkshire Hathaway’s stock portfolio.

The company does not like to talk about its net income, which is by definition affected by the volatility of market conditions. This indicator published “on a quarterly or even annual basis”, “is totally misleading”, asserts Warren Buffett in his letter to shareholders accompanying the results of Berkshire Hathaway.

A case for share buybacks

The famous investor prefers to highlight the operating result which only takes into account the activities owned by the conglomerate, namely insurance, energy and rail activities. And therefore excludes losses from stock market investments.

In his letter published on Saturday, Warren Buffett, thus evokes “a good year” 2022 for Berkshire Hathaway, marked by a “record” operating profit of 30.8 billion dollars, up 12.2% over one year.

Berkshire Hathaway also repurchased last year for a total of 8 billion dollars of its own shares. But these share buybacks did not prevent the company from increasing its liquidity, to 128.65 billion dollars at the end of December, against 109 billion dollars a year earlier, underlines CNBC.

Warren Buffett also took advantage of the publication of his annual results to plead in favor of share buybacks in his letter. For him, well-executed share buybacks benefit “all shareholders at all levels”.

“When you are told that all share buybacks are harmful to shareholders or to the country, or even particularly beneficial to the bosses, you are listening either to an economic illiterate or to a blunt-tongued demagogue,” continues the billionaire.

The billionaire’s speech comes as share buybacks have recently been in the sights of Joe Biden, the American president wishing to quadruple the tax rate on these operations to increase it from 1% to 4%. The large share buybacks of American oil companies, led by Chevron, had also provoked outspoken criticism from the White House, accusing these companies of using their profits to line “shareholders’ pockets” rather than to improve oil supply.

Remember that if Berkshire Hathaway carries out share buybacks, it has never paid a dividend to its shareholders.