Greg Abel is making his mark as the new leader of Berkshire Hathaway by dipping into the company’s legendary mountain of cash. According to second quarter earnings released Saturday, the conglomerate shifted billions out of its reserves, investing 10 billion dollars into Alphabet, the parent company of Google, while spending another 4.5 billion dollars to repurchase its own shares. These moves brought the firm’s total cash holdings down to roughly 365.5 billion dollars from nearly 400 billion at the end of March.
While Abel officially stepped into the CEO role in January following Warren Buffett’s retirement, Buffett continues to serve as chairman and maintains a heavy influence on strategy. The latest reports indicate that Berkshire added more than 21 billion dollars in various commercial and industrial stocks during the quarter, though the specific names remain secret until official filings are due later this month. Additionally, the company recently finalized a 6.8 billion dollar deal to acquire homebuilder Taylor Morrison, though that transaction closed too late to appear in these particular quarterly figures.
Market analysts view the renewed focus on share buybacks as a positive signal for investors, even if the amount spent was slightly lower than some had predicted. Many observers expected repurchases closer to 11 billion dollars based on previous hints from Buffett regarding charitable donations. However, experts note that Berkshire generally only buys back stock when leadership believes shares are trading below their intrinsic value rather than sticking to a rigid schedule. This cautious approach comes as the stock recently reached a new 52 week high.
Financial results for the period showed an impressive jump in bottom line profit, which more than doubled to over 25 billion dollars thanks largely to gains in investment values. On an operating basis, which excludes those volatile investment swings and provides a clearer picture of how its diverse businesses are actually performing, profit rose to nearly 13 billion dollars. Despite these wins, there were notes of caution surrounding Geico, where underwriting profits plummeted by 45 percent and trailed significantly behind other major auto insurers.