Derivative declines hit Buffett's Berkshire in Q2

Warren Buffett's Berkshire Hathaway saw its second-quarter profit fall 40% as derivative bets on stock indexes declined during the global equity downturn.

Berkshire's net income fell to $1.97bn in Q2, down from $3.3bn in the corresponding period last year. However, operating profit soared 73%, helped by the February takeover of railroad Burlington Northern Santa Fe, which Buffett paid $26.5bn for the 77.5% Berkshire did not already own. Buffett's derivative contracts, which start to mature in 2018, lose value when equity indexes decline. The derivative bets produced a loss of $1.8bn in the period, compared with a $1.96bn gain a year ago. Credit-default swaps lost $320m compared with a $391m rise in Q2 last year. Berkshire got $4.9bn ...