Berkshire Hathaway's Q2 2022 Results
A closer look at GEICO, Repurchases, and Greg Abel's BHE sale
Berkshire Hathaway reported second quarter results in a press release on Saturday, August 6 and also released a 10-Q report. The company posted a net loss of $43.8 billion in the second quarter of 2022 compared to net income of $28.1 billion in the second quarter of 2021. For the first six months of 2022, net loss was $38.3 billion compared to net income of $39.8 billion for the first six months of 2021. These swings in net income were primarily attributable to large investment losses during the first half of 2022 compared to large investment gains during the first half of 2021.
As I wrote yesterday in Berkshire Hathaway's Distorted Quarterly Results, net income is a particularly volatile measure for evaluating the company’s economic results over short periods of time. It makes more sense for shareholders to delve into the specifics of each of Berkshire’s reportable segments.
Berkshire reports net operating earnings to segregate results from the company’s business operations from investment results. The company posted net operating income of $9.3 billion in the second quarter of 2022 compared to net operating income of $6.7 billion in the second quarter of 2021. For the first six months of 2022, net operating income was $16.3 billion compared to net operating income of $13.7 billion for the first six months of 2021. The exhibit below shows quarterly results since 2018, with figures provided on an after-tax basis (click on the image for a larger view):
Yesterday’s article was a high level look comparable to being in a plane cruising at 30,000 feet looking down at the landscape below. In this article, I will go into more detail in a few areas that seem to warrant a closer look.
The article is divided into three parts: