Record Highs and Strategic Realignments: Berkshire Hathaway Impresses in the Second Quarter

Berkshire Hathaway, under the leadership of the legendary investor Warren Buffett, has announced its financial figures for the second quarter and recorded a new high in its cash reserves. The company's cash holdings rose to an impressive $276.9 billion, of which $234.6 billion are invested in U.S. Treasury bonds. In comparison, the holdings in the first quarter amounted to $189 billion. Buffett, a longtime proponent of Treasury bonds and their safety, emphasized at Berkshire's annual shareholders meeting in May how secure these investments are. However, the growing size of the reserves has sparked speculation about how the company will deploy these funds in the future, especially since yields on Treasury bills are currently over five percent. In the same period, Berkshire sold stocks worth $75.5 billion and invested $345 million in repurchasing its own shares. Particularly noteworthy is the further reduction of its stake in Apple. After already shedding about 13% of Apple shares in the first quarter, the value of the Apple holding fell to $84.2 billion at the end of the second quarter. This indicates the sale of approximately 390 million shares, nearly half of the original holding. Additionally, the stake in Bank of America was reduced, with further sales conducted in July. Despite these waves of sales, Berkshire retains significant holdings in Apple and Bank of America, which still represent the largest positions in its portfolio. The sales activities have, however, sparked speculation that Buffett either has concerns about a potential market overheating or is possibly looking to create liquidity for his successors. In May, Buffett indicated that the previous sales of Apple shares were related to building up cash reserves and that it was "extremely likely" that Apple would still be the largest position in Berkshire's portfolio at the end of 2024. Berkshire's operating income, which Buffett views as a better measure of the company's business health, amounted to $11.6 billion in the second quarter. This represents an increase from $11.2 billion in the first quarter and $10 billion in the previous year. Nearly half of the gains in operating income resulted from underwriting and investments in the insurance sector, as claims costs and expenses for catastrophe damages declined. Conversely, the results were weighed down by the railroad company BNSF Railway and the utility company Berkshire Hathaway Energy. Also noteworthy is the performance of Berkshire Hathaway's Class B shares, which have gained around 20% since the beginning of the year and closed on Friday at $428.36.