Warren Buffett walks the floor and meets with Berkshire Hathaway shareholders ahead of their annual meeting in Omaha, Nebraska on May 3rd, 2024.
David A. Grogan
Berkshire Hathaway‘s cash pile swelled to a record $276.9 billion last quarter as Warren Buffett sold big chunks in stock holdings including Apple.
The Omaha-based conglomerate’s cash hoard jumped significantly higher from the previous record of $189 billion, set in the first quarter of 2024. The increase came after the Oracle of Omaha sold nearly half of his stake in Tim Cook-led tech giant in the second quarter.
Berkshire has been a seller of stocks for seven quarters straight, but that selling accelerated in the last period with Buffett shedding more than $75 billion in equities in the second quarter. That brings the total of stocks sold in the first half of 2024 to more than $90 billion. The selling by Buffett has continued in the third quarter in some areas with Berkshire trimming its second biggest stake, Bank of America, for 12 consecutive days, filing this week showed.
For the second quarter, Berkshire’s operating earnings, which encompass profits from the conglomerate’s fully-owned businesses, enjoyed a jump thanks to the strength in auto insurer Geico. Operating earnings totaled $11.6 billion in the second quarter, up about 15% from $10 billion a year prior.
Buffett, who turns 94 at the end of the month, confessed at Berkshire’s annual meeting in May that he is willing to deploy capital, but high prices give him pause.
“We’d love to spend it, but we won’t spend it unless we think [a business is] doing something that has very little risk and can make us a lot of money,” the investment icon said at the time. “It isn’t like I’ve got a hunger strike or something like that going on. It’s just that … things aren’t attractive.”
The conglomerate bought back just $345 million worth of its own stock in the second quarter, significantly lower than the $2 billion repurchased in each of the prior two quarters.
The S&P 500 has surged the last two years to record levels as investors bet the Federal Reserve would lower inflation with higher interest rates, while avoiding an economic recession. So far, that has played out with the S&P 500 up 12% in 2024. However, concerns about a slowing economy have been awakened recently by some weak data, including Friday’s disappointing July jobs report. The Dow Jones Industrial average lost 600 points on Friday. Investors have also recently grown concerned about the valuations in the technology sector, which has led the bull market because of optimism surrounding artificial intelligence innovation.
Geico boosts earnings
Geico, the company Buffett once called his “favorite child,” registered nearly $1.8 billion in underwriting earnings before taxes in the second quarter, more than tripling the level of $514 million from a year ago.
Profit from BNSF Railway came in at $1.6 billion, in line with last year’s number. Berkshire Hathaway Energy utility business saw earnings fall to $326 million, nearly half of the $624 million from the same quarter a year ago. BHE continues to face pressure for possible wildfire liability.
Berkshire Hathaway ‘A’ shares, year-to-date
Berkshire’s net earnings, which includes short-term investment gains or losses, declined to $30.3 billion in the second quarter from $35.9 billion in the same period a year ago. Buffett cautions investors to not pay attention to quarterly fluctuations in unrealized gains on investments, which can be “extremely misleading.”