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Market Views

Why Warren Buffett is making less money now

Third-quarter operating profit dropped by 32% to $5.48 billion, or about $3,488 per Class A share.

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Warren Buffett

The world’s most famous investor, Warren Buffett, holding company, Berkshire Hathaway Inc today posted a lower operating profit as the COVID-19 pandemic weighed on some of its holding segments.

READ: Get familiar with Bill Gates and Warren Buffet’s favourite business book 

Why it’s happening: In a report credited to Reuters, Berkshire Hathaway Inc explained it bought a record $9.3 billion of its underperforming stock in the quarter and $16 billion in 2020 as Buffett remained unable to find huge acquisitions to boost growth.

  • Third-quarter operating profit dropped by 32% to $5.48 billion, or about $3,488 per Class A share, from $8.07 billion a year earlier.
  • The holding company partly owned by Warren Buffet disclosed most of its operating business interests have been negatively affected by the COVID-19 pandemic, though in the Q3, many such businesses witnessed significant increases in earnings and growth from Q2.

READ: DPR to enforce safety standards in tank farm operations

Berkshire Hathaway had earlier printed a $26.3 billion Q2 profit but lost $49.75 billion in Q1. It ended September with $145.7 billion of cash and equivalents.

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What you should know: Buffett is the chairman and largest shareholder of Berkshire Hathaway, the investment group according to the Bloomberg billionaire index is now worth $79.1 billion, unsurprisingly missing out of the top five rankings as it weighed on his company’s valuation.

READ: Apple, Tesla share prices drop massively from record highs

Recall Nairametrics some months ago broke the news on Warren Buffett’s Berkshire Hathaway Inc buying a new 20.9 million shares in Toronto-based Barrick Gold Corp, one of the world’s largest mining companies.

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READ: China’s economy bounces back from COVID-19 slump, with a growth of 4.9% in Q3 2020

It had earlier minimized some of its investments in America’s top banks. This includes America’s most valuable bank, JPMorgan Chase, and other leading financial brands like Wells Fargo & Co and eliminating a stake in Goldman Sachs Group Inc.

Explore Data on the Nairametrics Research Website

Olumide Adesina is a France-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading. Featured Financial Market Analysis for a Fortune Global 500 Company. Member of the Chartered Financial Analyst Society. Follow Olumide on Twitter @tokunboadesina or email [email protected]

1 Comment

1 Comment

  1. Didi

    November 8, 2020 at 11:30 am

    Its warren buffets net worth which is $79.1billion not Berkshire Hathaway

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Market Views

Airtel, Mobil, FCMB lead Nigerian Stocks Up W/W, investors gain N390 billion

The All-Share Index and Market Capitalization appreciated by 2.19% to close the week at 34,885.51 and N18.228 trillion respectively.

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Nigerian Stocks ended the week bullish cumulatively. The All-Share Index and Market Capitalization appreciated by 2.19% to close the week at 34,885.51 and N18.228 trillion respectively.

Investors gained N390.26 billion. A total turnover of 1.816 billion shares worth N25.791 billion in 31,665 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 11.400 billion shares valued at N35.892 billion that exchanged hands last week in 39,265 deals.

READ: Nigerian Tier-2 banks fired up, investors profit up N1 trillion W/W

  • The Financial Services Industry (measured by volume) led the activity chart with 1.274 billion shares valued at N14.710 billion, traded in 18,392 deals; thus, contributing 70.15% and 57.04% to the total equity turnover volume and value respectively.
  • The Conglomerates Industry followed with 217.170 million shares worth N231.809 million in 1,226 deals. The third place was the Consumer Goods Industry, with a turnover of 113.760 million shares worth N2.598 billion in 4,568 deals.
  • Trading in the top three equities namely Zenith Bank Plc, Transnational Corporation of Nigeria Plc, and Access Bank Plc (measured by volume) accounted for 649.529 million shares worth N8.104 billion in 6,395 deals, contributing 35.76% and 31.42% to the total equity turnover volume and value respectively.
  • Twenty-seven (27) equities appreciated at price during the week, higher than twenty-one (21) equities in the previous week. Forty-three (43) equities depreciated in price, lower than fifty-five (55) equities in the previous week. Ninety-one (91) equities remained unchanged, higher than eighty-five (85) recorded in the previous week.

READ: GTBank obtains approval-in-principle from CBN to operate as financial holding company

Top 10 gainers W/W

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  1. UPDC REAL ESTATE INVESTMENT TRUST up 32.53% to close at N5.50
  2. NEIMETH INTERNATIONAL PHARMACEUTICALS PLC up 12.03% to close at N2.70
  3. NCR (NIGERIA) PLC. up 10.00% to close at N1.98
  4. 11 PLC (MOBIL) up 9.89% to close at N208.80
  5. UNIVERSITY PRESS PLC. up 9.52% to close at N1.38
  6. UNITED CAPITAL PLC up 8.16% to close at N4.77
  7. CORONATION INSURANCE PLC up 7.32% to close at N0.44
  8. FCMB GROUP PLC. up 7.26% to close at N3.25
  9. AIRTEL AFRICA PLC up 7.00% to close at N535.00
  10. AXAMANSARD INSURANCE PLC up 6.36% to close at N2.34

Top 10 losers W/W

  1. JAPAUL OIL & MARITIME SERVICES PLC down 11.11% to close at N0.24
  2. HONEYWELL FLOUR MILL PLC down 10.83% to close at N1.07
  3. CUSTODIAN INVESTMENT PLC down 10.00% to close at N5.85
  4. CHAMPION BREW. PLC. down 9.43% to close at N0.96
  5. TRANS-NATIONWIDE EXPRESS PLC. down 9.38% to close at N0.87
  6. LINKAGE ASSURANCE PLC down 9.09% to close at N0.50
  7. WEMA BANK PLC. down 9.09% to close at N0.70
  8. PORTLAND PAINTS & PRODUCTS NIGERIA PLC down 8.42% to close at N2.61
  9. ARDOVA PLC down 8.33% to close at N13.75
  10. NASCON ALLIED INDUSTRIES PLC down 8.05% to close at N16.00

READ: MTN Nigeria, Dangote Cement stocks fired up, investors gain whopping N708 billion

Outlook

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Nigerian Stocks unsurprisingly recorded impressive gains W/W, as investors increased their buying pressure, especially buying from dips across the market spectrum.

Nigerian’s crude, selling at $48/barrel, boosted the Nigerian central bank dollar cash inflow. Also, the Apex Bank last concluded MPC meeting left all key indicators unchanged, kept Nigerian Bank stocks investors relieved, amid the bias that Nigerian banks would have enough headway in mitigating the prevailing economic uncertainties currently in play.

READ: Access Bank, First Bank up, investors gain N747 billion W/W

  • Stock experts anticipate the present bullish run currently playing at Africa’s best-performing equity market will remain in the coming week, albeit alongside profit-taking.
  • However, Nairametrics, envisage cautious buying, taking into consideration the low presence of the Foreign portfolio investors amid low investments seen lately in the Nigerian Stock Exchange amid stringent capital controls set in place by Nigeria’s Apex bank could limit the Stocks bull upside in the long term.

Explore Data on the Nairametrics Research Website

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Cryptocurrency

Why Bitcoin still looks like a bargain

With prices exceeding $18,000 for the first time since 2017, BTC looks poised to break its previous all-time high.

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Bitcoin on high demand, hits 2-year high, trading $17,000

As stakeholders, players, and crypto wannabes ponder if increasing their stakes on Bitcoin, the world’s most popular crypto seems ideal now, despite the fact that it’s trading near a record high, Nairametrics decided to weigh in on some key fundamentals showing Bitcoin looks like a bargain.

With prices exceeding $18,000 for the first time since 2017, BTC looks poised to break its previous all-time high. More investors are holding bitcoin for wealth preservation.

READ: Bitcoin on high demand, hits 2-year high, trading $17,000

A recent report from Glassnode, revealed plummeting Bitcoin exchange balances support the narrative that investors intend to hold their flagship crypto more than ever before, taking into consideration that with the prevailing demand in play, and limited supply of Bitcoin, the price would most definitely go north.

READ: Nigerians pay heavy price as laptop scarcity bites harder

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Bitcoin liquidity continues its downward trajectory, buttressing that the macro bitcoin is becoming scarce for open sale.

It is also important to note that Bitcoin has a circulating supply of 19 million coins and a max supply of 21 million coins, meaning there are about 2million left to be mined.

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READ: How Crypto can curb Nigeria’s high unemployment rate

Taking into account that about 4 million Bitcoins have been lost forever as a result of BTCs owners dying, and their next of kin not having access to such cryptos, it is fair to say there are only about 15million BTC presently in circulation to cater for over 7 billion people fighting to have a stake in Bitcoins, meaning that as BTC becomes scarce and more popular, it becomes a matter of time that the crypto asset valuation will hit the roof.

READ: Ripple hits a big bang, gains 30%

Bottom line

It’s vital to consider the bias saying that as global financial regulators begin to implement their regulatory framework on cryptos, it could become a matter of months for global banks and multinationals to increase their buying pressures on BTC. Thereby, pushing the price beyond the reach of an average investor.

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Market Views

Tesla up 500% in 2020, near $500 billion market value

The tech powerhouse is now less than $6 billion short of approaching the $500 billion market value.

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Tesla up 500% in 2020, near $500 billion market value, Survey unveils Elon Musk as the most inspirational leader in tech 

Tesla, the electric car automaker, has gained 500% in 2020 and has become by far the world’s most valuable automaker in the world, despite it producing far less than Volkswagen, Toyota, or General Motors.

The tech powerhouse is now less than $6 billion short of approaching the $500 billion market value, and extending its surge since reports struck Wall Street on Tesla making its S&P 500 debut on December 21, forcing index funds to buy billions of dollars of its share.

READ: U.S stock futures trade flat, Apple regains $2 trillion market value

Unsurprisingly, it became global investors’ choice amid its recent price action rising by 6% – showing a gain of over 6%. Tesla Inc. extended its rally at the most recent trading session ahead of its December debut in the S&P 500 (SPX), as it is now worth a market value of $494 billion.

READ: Nigeria spends N1.08 trillion to import used cars and motorbikes in one year 

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Its market capitalization is higher than the Gross Domestic Product (GDP) of any African country, Nigeria – $448.1billion, South Africa – $351.4billion, Egypt – $303.2billion, Algeria – $169.98billion, Morocco – $118.7billion, Ethiopia – $96.12billion, Kenya – $95.5 billion, Angola – $94.6 billion, Ghana – $66.9 billion, Tanzania – $63.2 billion.

READ: Dangote Cement, Nigerian Breweries drop, investors lose N46 billion

What you should know

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Now worth $494 billion, Tesla will increase the concentration of heavyweight companies within the S&P 500. It will be the 7th most valuable company within the index, just behind Berkshire Hathaway and ahead of Visa Inc., according to Refinitiv data.

READ: Crypto: UniSwap gives each owner over $2,000

  • About a fifth of the car company’s shares is owned by its Chief Executive, Elon Musk and other insiders.
  • The S&P 500 is weighted by the number of companies’ stocks available on the stock market.
  • The car company’s influence within the benchmark will be slightly reduced, putting it in 8 positions, just behind Johnson & Johnson, with an equivalent of about 1% of the S&P 500 index.

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