Berkshire Hathaway, the multinational conglomerate led by Warren Buffett, recently released its second-quarter financial results. The report revealed that the company’s cash pile has reached a record high of $276.9 billion, with $234.6 billion of that in Treasury bills. Additionally, Berkshire Hathaway’s operating profit surged, driven by gains in its insurance underwriting business.
Berkshire Hathaway’s Cash Pile Reaches Record High
Berkshire Hathaway’s cash and U.S. Treasury holdings have continued to grow, reaching a new high of $276.9 billion in the second quarter. This represents a significant increase from the $189 billion cash pile reported in the first quarter. The company’s holdings in Treasury bills account for the majority of this amount.
Warren Buffett has long been a proponent of investing in Treasurys, considering them to be the safest investment available. However, the size of Berkshire Hathaway’s growing reserve has raised speculation about how the company will deploy or continue to add to it, especially with Treasury bill yields over 5%. Buffett has previously stated that there are few attractive investment opportunities in the U.S., and even fewer elsewhere.
Berkshire Hathaway Slashes Stake in Apple
In addition to its cash holdings, Berkshire Hathaway made significant changes to its investment portfolio. The company further reduced its stake in Apple, selling approximately 390 million shares or nearly half of its stake. At the end of the second quarter, Berkshire Hathaway’s Apple holdings were valued at $84.2 billion.
Berkshire Hathaway also decreased its stake in Bank of America. Although this reduction was not reflected in the recent report, filings from July indicate that the company continued to trim its position in the bank. Despite these cuts, Apple and Bank of America remain Berkshire Hathaway’s top holdings.
Buffett’s selling spree has led to speculation that he may be concerned about an overheated market or that he is raising cash for future investments or successors. However, Buffett has previously stated that he expects Apple to remain Berkshire Hathaway’s largest holding by the end of 2024.
Operating Income Surges as Insurance Business Improves
Berkshire Hathaway’s operating income for the second quarter reached $11.6 billion, up from $11.2 billion in the previous quarter and $10 billion a year earlier. Buffett has emphasized that operating income provides a better picture of the company’s business health than net income.
Nearly half of the gains in operating income came from Berkshire Hathaway’s insurance businesses, as claims costs and catastrophe claims eased. However, the company’s BNSF Railway and Berkshire Hathaway Energy utility businesses weighed on the results.
Berkshire Hathaway’s Class B shares have outperformed the S&P 500 so far this year, with a 20% increase since the beginning of the year. As of Friday’s close, the Class B shares were valued at $428.36.
In conclusion, Berkshire Hathaway’s second-quarter financial results have revealed a record-high cash pile, a reduction in its stake in Apple, and a surge in operating income. These developments provide insights into Warren Buffett’s investment strategy and the overall health of the company’s diverse portfolio. Investors will be closely watching Berkshire Hathaway’s future moves as it continues to navigate the ever-changing financial landscape.
