The market is booming but not for Warren Buffett

The stock market has been hitting a new record every day, companies’ earnings have generally been solid lately, and the world’s most renowned investor is… struggling?

Warren Buffett’s famed holding company, Berkshire Hathaway, said its second-quarter profit fell 15 percent — a surprising drop that sent its stock down more than 1 percent Monday. If that doesn’t sound like much, keep in mind that a single “A” share of Berkshire costs $267,080, even after Monday’s decline of $2,920 a share.

The lofty price of a single Berkshire “A” share — which at first blush sounds more the list price of a house — stems from Buffett’s decision to never split the original class of stock from the founding of the company. A stock split keeps each existing investor’s stake in a company the same in dollar terms, but breaks up that value across an increased number of total shares.

There is also a newer “B” class of Berkshire shares whose price isn’t so high in nominal terms. The “B” shares also fell 1 percent Monday, ending at $178.07 a share.

Berkshire’s investment returns were down for the quarter, and showed an unexpected loss in its insurance underwriting business. But Buffett, whose “value investing” philosophy has a built-in focus on the longer term, probably isn’t sweating one subpar quarter much.

If anything, history suggests that lagging the broader market may ultimately prove to be a badge of honor for Buffett.

The “Oracle of Omaha” also famously sat out the 1990s tech bubble, declining to invest in tech stocks he said he didn’t understand. Berkshire’s performance suffered, and Buffett took criticism for being out of step with the times. But he ultimately had the last laugh when most of those tech companies’ business models turned out to be shaky as a bunch of dancing hamsters.

Some other details surrounding Berkshire’s latest profit announcement:

• Berkshire’s second-quarter profit totaled $4.3 billion, down from $5 billion in the year-ago period.
• The company’s cash reserves have grown to nearly $100 billion. Pressure from investors is likely to rise for Berkshire to make acquisitions with that cash pile. But its pickiness in evaluating potential purchases may create tension, Bloomberg reports.
• Although the average consumer doesn’t interact much with Berkshire directly, it owns significant stakes in many household-name brands. Its holdings include Geico, Dairy Queen, Duracell, Benjamin Moore & Co., and Fruit of the Loom.