TLDR
- Berkshire’s cash pile dropped to $364.7 billion, down 4% from its record high of $397.4 billion
- Berkshire became a net stock buyer for the first time in 14 quarters, with $20 billion net equity purchases
- $10 billion went into Alphabet and $6.8 billion into Taylor Morrison Home
- Berkshire repurchased $4.5 billion of its own stock in Q2, plus another $3.3 billion in July
- Operating profit rose 16% to $12.98 billion, though GEICO underwriting profits fell 45%
Greg Abel’s second quarter as Berkshire Hathaway CEO sent a clear message: the waiting is over.
Berkshire Hathaway Inc., BRK-B
Berkshire ended June with $364.7 billion in cash and Treasury bills. That sounds like a lot, and it is. But it marks the first decline in four years, down from a record $397.4 billion in March.
The drop came from real spending. Berkshire bought $23.5 billion in equities and sold $3.7 billion, making it a net buyer for the first time in 14 quarters. Its largest net equity outlay since early 2022.
That $20 billion net purchase included $10 billion more invested in Alphabet. Berkshire also completed its $6.8 billion acquisition of Taylor Morrison Home during the quarter.
Abel’s first shareholder letter as CEO stressed patience and discipline. The Q2 numbers suggest he also means action when the price is right.
CFRA analyst Cathy Seifert told Reuters that Abel was “slowly, gradually and subtly” asserting himself as Berkshire’s new leader.
Buybacks Signal Confidence in Berkshire’s Own Value
One of the loudest signals from the quarter was Berkshire buying itself.
The company spent $4.5 billion on buybacks in Q2, a dramatic jump from just $235 million in Q1. Berkshire’s policy only allows repurchases when Abel, consulting with Buffett, believes the stock trades below intrinsic value.
Berkshire then spent another $3.3 billion in July, bringing total buybacks since April to nearly $8 billion.
Gabelli Funds portfolio manager Macrae Sykes told CNBC the buybacks showed management saw “good value for money” in their own stock.
Barclays had estimated Q2 buybacks in the $5 to $11 billion range. UBS forecast $8.5 billion. The $4.5 billion came in below both, but still dwarfed Q1.
Operating Earnings Mostly Strong, GEICO a Weak Spot
Operating profit rose 16% to $12.98 billion for the quarter.
Berkshire Hathaway Energy jumped 27%. BNSF Railway gained 6%. Manufacturing, service and retail earnings climbed 24% to nearly $4.5 billion.
Insurance was the soft spot. Underwriting earnings fell 13% and insurance investment income dropped 9%. GEICO took the hardest hit, with underwriting profits down 45%.
After stripping out favorable currency moves, operating earnings grew closer to 6%, according to market data.
Berkshire also trimmed its DaVita position just before the dialysis company’s stock dropped 23% following a weak Q2 earnings report. The sale was not discretionary. Under a 2024 agreement, DaVita is required to buy back enough Berkshire-held stock each quarter to keep Berkshire’s stake at or below 45%. The trim involved just under 183,000 shares, worth $36.5 million at roughly $200 per share based on volume-weighted average pricing.
Berkshire’s full Q2 portfolio snapshot, which will detail all equity buys and sells, is expected in the coming week.6
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