Berkshire Hathaway Lost $49.7 Billion in First Quarter Stung by Coronavirus

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

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

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

The loss overshadowed a 6 percent rise in Berkshire’s operating earnings, which track the performance of the company’s owned-and-operated businesses like the insurer Geico. Mr. 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. (Berkshire also disclosed that the value of its stake in Kraft Heinz on its books exceeds the market value of that holding by about 40 percent, and warned that it might have to take a write-down on the investment in the future.)

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 percent gain for the quarter, to $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 ahead of Berkshire’s first-ever 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 to listen to Mr. Buffett expound on the state of capitalism, business, politics and much more.

Absent from the meeting will be Berkshire’s 96-year-old vice chairman, Charles T. Munger, who lives in Los Angeles. But Gregory Abel, who is one of Berkshire’s top executives and considered a potential successor to Mr. Buffett, will attend in person.

Shareholders, who can submit questions for Mr. Buffett to answer live, are likely to be interested in what investment opportunities lie ahead for Berkshire, which reported having $137.3 billion in cash at the end of the quarter. In contrast to his actions during the financial crisis of 2008, when Mr. Buffett extended lifelines to American corporate giants — on hugely profitable terms for himself — he has not talked about what bargains exist in the pandemic era.

• Updated April 11, 2020

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    If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

  • When will this end?

    This is a difficult question, because a lot depends on how well the virus is contained. A better question might be: “How will we know when to reopen the country?” In an American Enterprise Institute report, Scott Gottlieb, Caitlin Rivers, Mark B. McClellan, Lauren Silvis and Crystal Watson staked out four goal posts for recovery: Hospitals in the state must be able to safely treat all patients requiring hospitalization, without resorting to crisis standards of care; the state needs to be able to at least test everyone who has symptoms; the state is able to conduct monitoring of confirmed cases and contacts; and there must be a sustained reduction in cases for at least 14 days.

  • How can I help?

    The Times Neediest Cases Fund has started a special campaign to help those who have been affected, which accepts donations here. Charity Navigator, which evaluates charities using a numbers-based system, has a running list of nonprofits working in communities affected by the outbreak. You can give blood through the American Red Cross, and World Central Kitchen has stepped in to distribute meals in major cities. More than 30,000 coronavirus-related GoFundMe fund-raisers have started in the past few weeks. (The sheer number of fund-raisers means more of them are likely to fail to meet their goal, though.)

  • Should I wear a mask?

    The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

  • How do I get tested?

    If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.

  • How does coronavirus spread?

    It seems to spread very easily from person to person, especially in homes, hospitals and other confined spaces. The pathogen can be carried on tiny respiratory droplets that fall as they are coughed or sneezed out. It may also be transmitted when we touch a contaminated surface and then touch our face.

  • Is there a vaccine yet?

    No. Clinical trials are underway in the United States, China and Europe. But American officials and pharmaceutical executives have said that a vaccine remains at least 12 to 18 months away.

  • What makes this outbreak so different?

    Unlike the flu, there is no known treatment or vaccine, and little is known about this particular virus so far. It seems to be more lethal than the flu, but the numbers are still uncertain. And it hits the elderly and those with underlying conditions — not just those with respiratory diseases — particularly hard.

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  • Should I stock up on groceries?

    Plan two weeks of meals if possible. But people should not hoard food or supplies. Despite the empty shelves, the supply chain remains strong. And remember to wipe the handle of the grocery cart with a disinfecting wipe and wash your hands as soon as you get home.

  • Can I go to the park?

    Yes, but make sure you keep six feet of distance between you and people who don’t live in your home. Even if you just hang out in a park, rather than go for a jog or a walk, getting some fresh air, and hopefully sunshine, is a good idea.

  • Should I pull my money from the markets?

    That’s not a good idea. Even if you’re retired, having a balanced portfolio of stocks and bonds so that your money keeps up with inflation, or even grows, makes sense. But retirees may want to think about having enough cash set aside for a year’s worth of living expenses and big payments needed over the next five years.

  • What should I do with my 401(k)?

    Watching your balance go up and down can be scary. You may be wondering if you should decrease your contributions — don’t! If your employer matches any part of your contributions, make sure you’re at least saving as much as you can to get that “free money.”

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