Key Takeaways From Berkshire Hathaway’s Earnings

Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) updated investors on its second-quarter financial results Saturday, revealing its cash pile rose to a record high as it made more cuts to its stake in Apple (AAPL), while its operating profit surged as its insurance underwriting business made gains, and more.

Berkshire’s Cash Pile Rises to a Record $276.9 Billion

Berkshire’s cash and U.S. Treasury holdings rose to another record high in the second quarter at $276.9 billion, with $234.6 billion of that in Treasury bills. In the first quarter, the company’s cash pile totaled $189 billion.

Buffett has been a longtime fan of Treasurys, calling them “the safest investment there is” at Berkshire’s annual meeting in May, though the massive size of Berkshire’s growing reserve has raised speculation about how the company might eventually deploy it—or keep adding to it, with Treasury bill yields over 5%.

While the firm could move to expand its portfolio, Buffett suggested earlier this year that few candidates in the U.S. satisfy Berkshire’s criteria, with “essentially no candidates” elsewhere, saying “things aren’t attractive.”

The rise in Berkshire’s cash pile came as it said it sold $75.5 billion worth of stock in the quarter. The company used $345 million to buy back Berkshire stock.

Berkshire Slashes Its Stake in Apple Further

After trimming its stake in Apple by about 13% in the first quarter, Berkshire cut its stake further, reporting that its Apple holdings were valued at $84.2 billion at the end of the second quarter, suggesting it sold about 390 million shares or nearly half its stake.

Berkshire also lowered its stake in Bank of America (BAC). While not reflected in Saturday’s report, Berkshire continued trimming its stake in Bank of America in July, recent filings showed.

Berkshire retains significant stakes in Apple and Bank of America despite the cuts, with the two stocks still representing its top holdings, though Berkshire’s selling spree over the last few quarters has raised speculation Buffett may be concerned about the market becoming overheated or raising cash for successors.

Back in May, Buffett had suggested earlier sales of Apple stock came as Berkshire was building its cash position, and said it’s “extremely likely” Apple would still be Berkshire’s largest holding at the end of 2024.

Operating Income Surges Over 15% as Insurance Business Improves

Berkshire’s operating income, which Buffett has said provides a better picture of the health of the company’s businesses than net income, came in at $11.6 billion, up from $11.2 billion in the first quarter, and $10 billion a year earlier.

Nearly half of the gains in Berkshire’s operating income came from underwriting and investments in Berkshire’s insurance businesses as claims costs and catastrophe claims eased. Berkshire’s BNSF Railway and Berkshire Hathaway Energy utility businesses weighed on results.

Berkshire Hathaway’s Class B shares have outperformed the S&P 500 so far this year, up about 20% since the start of the year, at $428.36 as of Friday’s close.

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