The main reason? Widening derivative losses. Buffett did say in a recent letter to shareholders, though, that the company plans to shrink its stake in the derivative market in the future, according to Bloomberg. Derivatives bets, since they’re tied to the market, have made Berkshire’s earnings more volatile of late.
BRK has also pared back its consumer-product stock holdings including Johnson & Johnson (NYSE:JNJ), Procter & Gamble (NYSE:PG) and Kraft (NYSE:KFT) — which have been facing various challenges. PG, for example, has struggled with pricing, while JNJ has been dealing with fines and recalls recently.
On the other side of the coin, the company has increased its stake in financial firms like Wells Fargo (NYSE:WFC), and in companies that fall under the “commerical, industrial and other” category.
Additionally, Buffett makes one major acquisition a year, but failed to come to an agreement on his most recent attempt worth around $22 billion. A deal larger than $30 billion could be in store for 2013 if nothing comes to fruition this year, the billionaire said.
The company’s has more than $40 billion in cash, making such a possibility seem plausible. Berkshire’s last two acquisition were The Lubrizol Corporation and the Burlington Northern Santa Fe railroad.