Berkshire Hathaway’s cash reserves surged to an unprecedented $276.9 billion in the last quarter, surpassing the previous record of $189 billion set in early 2024. This substantial increase follows Warren Buffett’s decision to significantly reduce his holdings in various stocks, including a notable divestiture of nearly half of Berkshire’s stake in Apple during the second quarter.
For seven consecutive quarters, Berkshire Hathaway has been reducing its stock holdings, with the pace of sales accelerating recently. In the second quarter alone, Buffett liquidated over $75 billion in equities, raising the total sales to over $90 billion for the first half of 2024. The company has continued to adjust its portfolio in the third quarter, evidenced by a recent 12-day reduction in its investment in Bank of America.
Operating earnings for the second quarter saw a notable increase to $11.6 billion, up approximately 15% from $10 billion the previous year, driven by strong performance from Geico. However, the company’s stock buybacks were notably subdued, totaling only $345 million, a significant decrease from the $2 billion repurchased in each of the two preceding quarters.
Buffett, approaching his 94th birthday, has expressed a cautious stance on deploying capital, citing high valuations as a deterrent. Despite a strong performance by the S&P 500, which has risen 12% in 2024, recent economic data and concerns over technology sector valuations have tempered market optimism.
Geico, described by Buffett as his “favorite child,” reported underwriting earnings before taxes of nearly $1.8 billion, more than tripling the $514 million from the previous year. Conversely, profit from BNSF Railway held steady at $1.6 billion, while Berkshire Hathaway Energy’s earnings fell to $326 million, nearly half of last year’s figure due to potential wildfire liability pressures.
Net earnings for the second quarter declined to $30.3 billion from $35.9 billion the previous year. Buffett advises investors to be wary of quarterly fluctuations in unrealized investment gains, which can be misleading.
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