Warren Buffett Watch
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
- Amended Berkshire Hathaway Filing Indicates No Secret Stock Stakes at End of Q3
- Buffett's Wealth and Fame Hasn't Helped 'Warren' As a Name
- CNBC VIDEO: Warren Buffett & Bill Gates 'Walk & Talk' at Columbia University
- Warren Buffett to CNBC: Curbing Fed's Independence Could Lead to 'Mischief'
- Warren Buffett to Co-Chair Goldman Sachs Program to Help Small Businesses
- Warren Buffett: 'Reasonable Return is Good Enough' for Long-Haul Railroad Ride
- Warren Buffett's Berkshire Hathaway Almost Doubles Wal-Mart Holdings During Summer
- Warren Buffett's Berkshire Portfolio Snapshot Coming Later Today
- Warren Buffett to CNBC: 'I Haven't Bought American Express In Years'
RSS FEED
- U.S. Stocks Fall on Dubai Worries
- Black Friday at Best Buy
- Strategists on Dubai: Avoid 'Rash Moves' Now
- Longer Lines, Fuller Carts This Black Friday
- Dubai Stock Market Fear Has 'Legs': Dennis Gartman
- Obama's Emission Reduction Pledge Paints Future for Autos
- Is Super Bowl Halftime Act Too Old?
- Surprising Options Trades in TiVo Shares
- EA Sports Hopes to Pump Up Sales Through Pop-Up Locations
- Abu Dhabi Will Aid Debt-Fraught Dubai 'Case by Case'
- Banks With The Biggest Exposure to The UAE
- Dubai's Debt Woes Signal New Era for Creditors
- Next Week: Cash In Now Or Wait For A Santa Rally?
- Dubai Stock Selloff May Bring Buying Opportunity
- Longer Lines, Fuller Carts This Black Friday
- Big US Banks May Be Forced to Raise Capital: Bove
- Bank of America Amends Pay for Senior Executives
- Tiger Woods Out of Hospital After Accident
Text Size 
Executive Producer
 |
Warren Buffett's Berkshire Hathaway reports $1.532 billion in after-tax derivatives gains during its second quarter, helping to bring the company's net back into the black.
Most of the "paper" gains for Berkshire's derivatives are the result of rallies by the quartet of stock indexes covered by its "long duration equity index put options contracts."
The contracts are essentially insurance policies against long-term stock market drops. Their current value rises and falls along with the stock indexes they cover, and has to be included in net earnings, according to accounting rules.
Berkshire points out that the mark-to-market accounting produces "extreme volatility in our periodic reported earnings." While Buffett has consistently remained optimistic the contracts will make Berkshire a lot of money years from now, the market hasn't been so sure, and that's helped put pressure on BRK shares, and Buffett's reputation. (It was only a few days ago that Berkshire shares went back above $100,000 for the first time since January.)
This quarter's derivatives gains contributed to an overall net after-tax profit of $3.295 billion dollars for the quarter ($2123 per class A share.) That's up 14.4 percent from $2.880 billion in the second quarter of 2008.
It's also a return to profitability for Berkshire, after it reported a net loss of $1.5 billion in this year's first quarter.
 |
Buffett puts an emphasis on book value in Berkshire's annual reports, saying its the best way to estimate the company's "intrinsic value."
Operating earnings came in at $1,147 per share, down 21.7 percent from last year's second quarter, and below the average forecast of $1,238 from the handful of analysts who cover the stock.
Profits from Berkshire's non-insurance businesses, many of which depend on consumer spending, fell by 47 percent to $574 million. Buffett has said in recent months that he's seeing no signs of an economic rebound, based on constantly updated data coming to him from Berkshire's consumer-oriented companies.
Current Berkshire stock prices:
Class A: [BRK.A
Loading...
()
]
Class B: [BRK.B
Loading...
()
]
For more Buffett Watch updates follow alexcrippen on Twitter.
Email comments to
Data is a real-time snapshot *Data is delayed at least 15 minutes