Forbes list billionaire, Warren Buffett has lost $1.14 billion of his Berkshire Hathaway Inc. stock in the first quarter making it the company’s first net loss since 2009.
The loss was caused by new accounting-rule changes made in the company.
According to Bloomberg News, the new rules require Berkshire to report unrealised gains or losses in equity investments in net income.
Buffett had warned in his annual letter to shareholders released in February that;
“…the requirement will produce some truly wild and capricious swings in our GAAP bottom line…”
He also added saying that the new accounting rule:
“…will severely distort Berkshire’s net income figures and very often mislead commentators and investors.”
Buffett has said operating results are a better barometer for measuring the company’s performance, in part because Berkshire’s more than $170 billion stock portfolio can fluctuate from quarter to quarter.
Operating profit, which doesn’t include those changes, jumped 49% to $5.29 billion during the first quarter as insurance underwriting swung to a profit after a difficult 2017.
A 16% jump in revenue at auto insurer Geico helped the company turn an underwriting profit, according to a regulatory filing.
Geico was helped by rate increases that pushed premiums higher.
The railroad business also posted a gain in profit due to increased revenues per car as fuel prices rose.
Berkshire’s cash pile fell to $109 billion at the end of March from the record $116 billion at year-end, the first decline in two years.
Buffett has said that deploying that cash into new, large acquisitions is key to increasing earnings over time.
The first quarter’s drop was driven in part by spending more than $12 billion on more Apple Inc. shares.
The company reported the value of its stake in Apple as $40.7 billion as of March 31, which is more than the $28.2 billion at the end of 2017.
Buffett said in a CNBC interview that aired last Friday that his company bought an additional 75 million shares of the technology company in the first quarter.
Berkshire said the fair value of its investment in Kraft Heinz Co. dropped by more than $5 billion to $20.3 billion in the quarter, as shares slipped almost 20%.
Berkshire shareholders gathered in Omaha for the company’s annual meeting Saturday, where Buffett and his business partner Charles Munger discussed everything from the economy to investing tips and even the pair’s wagers on certain companies.