Monday, February 25, 2019

Buffett's Big Loss

Warren Buffett is possibly the most successful investor ever, so when his investment vehicle Berkshire Hathaway posts a sizable quarterly loss, it's worth paying attention to why. According to the shareholder's letter that was released over the weekend, Berkshire suffered losses of $25.4 billion in the fourth quarter, in large part the result of a surprise write-down at Kraft Heinz.

On Thursday Kraft Heinz reported weak fourth-quarter earnings and a $15.4 billion write-down. Berkshire owns a nearly 27 percent stake in the food conglomerate. “Indeed, in the fourth quarter, a period of high volatility in stock prices, we experienced several days with a ‘profit’ or ‘loss’ of more than $4 billion,” Buffett wrote in his shareholder's letter.

Overall, Berkshire owns $173 billion of stocks, and the market's swoon in the fourth quarter helped cause losses of $22.7 billion on those securities. But stocks have recovered this year, and many of those losses have now been reversed. We'll find out how much in the next Berkshire letter.

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