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Tuesday, May 8, 2018

Business Mogul Warren Buffet Loses $1.14bn

Business magnate Warren Buffett has recorded a $1.14 billion loss at Buffett’s Berkshire Hathaway Inc. in the first quarter of 2018.

According to the company, the loss was due to new accounting-rule changes, which the Oracle of Omaha had predicted would cause problems.

The rules require Berkshire to report unrealised gains or losses in equity investments in net income.

The “requirement will produce some truly wild and capricious swings in our GAAP bottom line,” Buffett warned in his annual letter to shareholders released in February.

The accounting change “will severely distort Berkshire’s net income figures and very often mislead commentators and investors.”

According to Buffett, operating results are a better barometer of company performance, due to Berkshire’s more than $170 billion stock portfolio can fluctuate from quarter to quarter.

Operating profit, which doesn’t include those changes, jumped 49 percent to $5.29 billion during the first quarter as insurance underwriting swung to a profit after a difficult 2017.