Berkshire Hathaway’s Latest Earnings Reveal Record Cash Reserves and Strong Operating Profit Berkshire Hathaway (BRK.A, BRK.B) provided an update on its second-quarter financial performance on Saturday, showcasing a substantial rise in its cash reserves, strategic reductions in its Apple (AAPL) stake, and a notable increase in operating income driven by improvements in its insurance underwriting business.
Record Cash Reserves Reach $276.9 Billion
Berkshire Hathaway’s cash and U.S. Treasury holdings surged to a record $276.9 billion in the second quarter, with $234.6 billion of this amount in Treasury bills. This represents a significant increase from the $189 billion reported in the previous quarter. Warren Buffett, the company’s Chairman and CEO, has long favored Treasury securities, describing them as “the safest investment there is.” The growing cash reserve has spurred speculation about how Berkshire might eventually deploy this capital, given the attractive yields on Treasury bills exceeding 5%.
Despite potential expansion opportunities, Buffett suggested earlier this year that investment candidates in the U.S. are limited, with few options meeting Berkshire’s criteria. The increase in cash reserves followed the sale of $75.5 billion worth of stock during the quarter and a $345 million stock buyback program.
Further Reductions in Apple Stake
Berkshire Hathaway further reduced its stake in Apple, cutting its holdings by approximately 13% in the first quarter and continuing to trim its position. As of the end of the second quarter, Berkshire’s Apple investment was valued at $84.2 billion, indicating the sale of about 390 million shares, nearly half of its previous stake. Berkshire also reduced its stake in Bank of America (BAC), though recent filings show continued reductions in July. Despite these sales, Apple and Bank of America remain significant holdings for Berkshire, with ongoing speculation about Buffett’s strategic intentions and concerns about a potentially overheated market.
Operating Income Rises Over 15%
Berkshire Hathaway’s operating income, considered a key indicator of the company’s business health, increased to $11.6 billion for the second quarter, up from $11.2 billion in the previous quarter and $10 billion a year ago. Nearly half of this growth was attributed to Berkshire’s insurance businesses, benefiting from reduced claims costs and fewer catastrophe claims. However, results were dampened by performance in Berkshire’s BNSF Railway and Berkshire Hathaway Energy segments.
Berkshire Hathaway’s Class B shares have outperformed the S&P 500 this year, rising approximately 20% since the beginning of the year, closing at $428.36 on Friday.
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