Covid 19 coronavirus Warren Buffett's Berkshire Hathaway takes huge virus hit

Legendary investor Warren Buffett. Photo / Getty

Not even Warren Buffett was spared financially from the coronavirus, as his conglomerate, Berkshire Hathaway, reported a US$49.7 billion ($76.7b) loss in the first quarter 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 US$21.7 billion profit in the same quarter a year earlier. The conglomerate's vast array of investments exposed it — and Buffett, long considered one of the world's top investors — to huge swaths of the battered U.S. economy.

Its total investment loss for the quarter, without accounting for operating earnings, was US$54.5 billion. By comparison, its investment gain in all of 2019 was US$56.3 billion.

Berkshire's investment loss tracked the overall slide in stock markets: The S&P 500 dropped 20% 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 US$125 billion.)

The loss overshadowed a 6% rise in Berkshire's operating earnings, which track the performance of the company's owned-and-operated businesses like insurer Geico. 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.

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% gain for the quarter, to US$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 before Berkshire's first 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, Nebraska, to listen to Buffett expound on the state of capitalism, business, politics and much more.

• Covid19.govt.nz: The Government's official Covid-19 advisory website