Berkshire Hathaway Profits Soar as Greg Abel Begins Aggressive Share Spending
Berkshire Hathaway began drawing down its giant cash pile during the second quarter of this year. The Omaha, Nebraska-based conglomerate conducted share buybacks and bought more shares than it sold for the first time in more than three years.
The company reported on Saturday (8/8) that its quarterly profit more than doubled. The increase was driven by investment gains and strong results from its industrial and retail business units.
Berkshire’s net profit soared to $25.67 billion (approximately Rp410.7 trillion) or $17,868 per Class A share, compared with $12.37 billion or $8,601 per Class A share in the same period last year.
As of the end of June, Berkshire held $364.7 billion in cash and Treasury bills. This figure represents a 4% decline compared to three months earlier, marking the first time the company’s cash has declined sequentially in the last four years.
The spending spree signals that Greg Abel, who replaced Warren Buffett as CEO in January, is beginning to exert his influence on the conglomerate his predecessor led for more than half a century.
In total, Berkshire bought $23.5 billion worth of equity securities during the second quarter and sold only $3.7 billion.
Operating profit, which excludes certain investment results and is considered by Warren Buffett to be a more accurate measure of performance, rose 16.3% to $12.98 billion. Profit from the manufacturing, service, and retailing portfolio—including industrial metal components, Duracell batteries, and Flying J fuel stations—surged 24% to $4.47 billion.
However, the company’s insurance unit reported a decline in underwriting profit, weighed down by results from auto insurer Geico and investment income.
Despite the current market being considered quite elevated, Berkshire observers remain patient in watching Abel’s cash management strategy. “It is very difficult to expect Greg to make a big deal in a market that is as frothy as it is now,” said Paul Lountzis, president of Lountzis Asset Management.
Currently, Berkshire’s largest holdings remain concentrated in Alphabet, American Express, Apple, Bank of America, and Coca-Cola. More specific details regarding this share portfolio are scheduled to be disclosed in a regulatory filing next week.