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Buffett’s Berkshire Earnings Rise; Cash Swells As Buybacks Cool

Warren Buffett’s Berkshire Hathaway (BRKB) reported second-quarter earnings Saturday morning.


Berkshire Earnings Fall

Operating earnings rose 7% to $10.04 billion vs. a year earlier. Insurance underwriting profit surged 74%.

Analysts expected Berkshire earnings to fall 8% vs. a year earlier to $3.87 a share, with revenue up nearly 6% to $80.58 billion. In Q1, Berkshire earnings grew 14% to $3.69 a share, topping views. Operating earnings rose 12.6% to $8.065 billion.

Warren Buffett has said he favors looking at operating income. That reflects total profits from the companies that Berkshire owns and runs. Those include insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing and retailing.

Net earnings include short-term investment gains. Share prices rose strongly in the second quarter.

Rising interest rates should fuel strong investment income, with Berkshire investing heavily in short-term T-bills with yields above 5%. Warren Buffett expressed his confidence in Treasurys this past week after Fitch Ratings downgraded the U.S. sovereign credit rating to AA+ from AAA.

Did Warren Buffett Sell Stocks In Q2?

Investors will also want to know about whether Buffett’s conglomerate added or sold equities overall in the quarter. In Q1, Berkshire sold a net $10.4 billion worth of stocks.

Apple (AAPL) accounts for nearly half of Berkshire’s equity portfolio. Apple stock has been a strong performer, up 40.1% year to date. But the Dow tech titan did tumble 7.1% last week amid the market retreat and its own lackluster earnings.

Bank of America (BAC) is another big holding. BAC stock and many banks struggled in the second quarter after the March banking crisis, but rebounded in July.

Warren Buffett has been bulking up on energy, continuing to add to its stake in Occidental Petroleum (OXY). In early July, after the second quarter, Berkshire Hathaway Energy agreed to buy out the Dominion Energy (D) stake in a Maryland liquefied natural gas export project for $3.3 billion. That will give Berkshire a 75% stake.

Berkshire added slightly to Apple and BAC stock holdings in the first quarter. It will release specific Q2 stock buys and sells in a few weeks.

Berkshire Stock Buybacks Slow

Warren Buffett bought just $1.4 billion of Berkshire stock in the second quarter. In Q1, Berkshire repurchased $4.4 billion, up 57% from Q4 and the most since Q1 2021.

Berkshire Cash Hoard Swells

Berkshire Hathaway ended the second quarter with a mammoth cash hoard of $147.38 billion, up sharply from Q1’s $130.62 billion and Q4’s $128 billion.

Berkshire Stock

BRKB stock fell 1.1% to 349.99 on Friday. But shares rose 18 cents for the week, eking out their fourth straight weekly gains. BRKB stock is slightly extended from a buy point from a 331.84 buy point decisively cleared in early June.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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