Not even Warren E. Buffett was spared financially from the coronavirus, as his conglomerate, Berkshire Hathaway, reported a $49.7 billion loss in the first quarter on Saturday, reflecting the outbreak’s toll on an investment portfolio that includes big stakes in major airlines and financial firms.
The loss was Berkshire’s biggest ever and a sharp swing from a $21.7 billion profit in the same quarter a year earlier. The conglomerate’s vast array of investments exposed it — and Mr. Buffett, long considered one of the world’s top investors — to huge swaths of the battered American economy.
Its total investment loss for the quarter, without accounting for operating earnings, was $54.5 billion. By comparison, its investment gain in all of 2019 was $56.3 billion.
Berkshire’s investment loss tracked the overall slide in stock markets: The S&P 500 dropped 20 percent in the first quarter. (The company’s biggest holdings are also mainstays of the S&P 500: American Express, Apple, Bank of America, Coca-Cola and Wells Fargo, with those stakes amounting to nearly $125 billion.)
The loss overshadowed a 6 percent rise in Berkshire’s operating earnings, which track the performance of the company’s owned-and-operated businesses like the insurer Geico. Mr. Buffett regards that as a better measure of the company’s overall performance and has long argued that quarterly paper gains or losses on its investments “are often meaningless” in understanding its overall health.
But it is hard to ignore the damage to a portfolio that includes stakes in financial firms like Bank of America and American Express, both of which reported steep drops in earnings for the first quarter, and four of the biggest U.S. airlines. (Berkshire also disclosed that the value of its stake in Kraft Heinz on its books exceeds the market value of that holding by about 40 percent, and warned that it might have to take a write-down on the investment in the future.)
Even some of the conglomerate’s wholly owned businesses, like the Burlington Northern Santa Fe railroad and retailers like See’s Candy, were hurt by the lockdowns that have shaken the U.S. economy. Still, Geico reported a 28 percent gain for the quarter, to $984 million, while Berkshire’s overall insurance investment profits rose modestly because of increased dividend income for the company.
The first-quarter results were released ahead of Berkshire’s first-ever online-only annual shareholder meeting. It is a change, made necessary by the pandemic, to an event that usually draws tens of thousands of investors to an arena in Omaha to listen to Mr. Buffett expound on the state of capitalism, business, politics and much more.
Absent from the meeting will be Berkshire’s 96-year-old vice chairman, Charles T. Munger, who lives in Los Angeles. But Gregory Abel, who is one of Berkshire’s top executives and considered a potential successor to Mr. Buffett, will attend in person.
Shareholders, who can submit questions for Mr. Buffett to answer live, are likely to be interested in what investment opportunities lie ahead for Berkshire, which reported having $137.3 billion in cash at the end of the quarter. In contrast to his actions during the financial crisis of 2008, when Mr. Buffett extended lifelines to American corporate giants — on hugely profitable terms for himself — he has not talked about what bargains exist in the pandemic era.