- Berkshire Hathaway spent $4.5 billion on share buybacks in Q2, its largest since 2021
- Operating earnings rose 16% to nearly $13 billion, driven by manufacturing and retail gains
- Cash holdings fell to $365.5 billion as net equity purchases neared $20 billion in the quarter
Warren Buffett's Berkshire Hathaway stepped up capital returns in the second quarter, spending about $4.5 billion on share buybacks. The company's strong performance from its operating businesses pushed earnings higher and gave CEO Greg Abel more room to deploy the conglomerate's enormous cash reserves.
The repurchase was Berkshire's largest quarterly buyback since 2021, underscoring a shift in how the company is using its balance sheet under Abel, who is in his first year as chief executive after succeeding Warren Buffett.
Berkshire's operating earnings rose 16% in the three months through June to nearly $13 billion, helped in part by stronger results from its manufacturing, service and retailing businesses.
The company's results are closely tracked by investors because Berkshire has exposure to a broad range of industries, including insurance, railroads, energy, manufacturing and retail. Its performance is therefore often viewed as a broad indicator of the health of the US economy.
Berkshire Puts More Cash To Work
Berkshire's massive cash pile declined during the quarter as the company increased its investments.
Cash and cash equivalents fell to $365.5 billion, while Berkshire's net purchases of equities approached $20 billion during the period.
The increased deployment marks a notable change after years in which Berkshire was relatively cautious about acquisitions and investments under Buffett. High market valuations had often made it difficult for the company to find investments that met its value-focused approach.
Abel has now moved more aggressively to put Berkshire's capital to work.
The company had resumed share repurchases in the first quarter after more than a year without buying back its own stock. Earlier this year, Abel said Berkshire would restart buybacks because management believed the company's shares were trading below their intrinsic value.
Also Read: Berkshire Hathaway To Buy Taylor Morrison For $6.8 Billion
Abel Makes Bigger Bets
The new CEO has also moved beyond Berkshire's traditional investment playbook with two major transactions.
Berkshire spent $6.8 billion to acquire homebuilder Taylor Morrison Home Corp., reflecting its preference for businesses that can be purchased at attractive valuations.
At the same time, the conglomerate committed $10 billion to Alphabet, Google's parent company, to support investments linked to artificial intelligence.
The Alphabet investment marks a significant step into a rapidly expanding technology theme for Berkshire. Following the transaction, Alphabet became one of Berkshire's five largest holdings at the end of the quarter, replacing Chevron Corp.
Berkshire Stock Trails S&P 500
Despite the stronger earnings and increased capital deployment, Berkshire's stock has not kept pace with the broader US market this year. Berkshire Class B shares gained 3.8% through Friday's close, compared with an approximately 13% advance in the S&P 500.
The performance comes as investors assess whether Abel can maintain Berkshire's long-standing culture of disciplined capital allocation while finding new avenues for growth.
For shareholders, the latest quarter provides two clear signals: Berkshire is willing to return capital when its own shares appear attractively valued, but it is also increasingly prepared to deploy its enormous balance sheet into equities and large corporate transactions.
The $4.5 billion buyback, nearly $20 billion of net equity purchases and the Alphabet investment together show a Berkshire that is becoming more active with its capital under Abel's leadership.
Also Read: Berkshire Hathaway's Cash Pile Jumps To Record $397B In Greg Abel's First Quarter as CEO
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