Abel puts a big chunk of Berkshire's cash to work

In his second quarter as the new CEO of Berkshire Hathaway, Greg Abel did some serious spending. As a result, the company's still huge cash reserves declined significantly for the first time since early 2022.

Saturday morning's financial report for the three months ending June 30 shows Berkshire had $365.5 billion on hand, a reduction of 8.0% from its record high $397.4 billion as of March 31. Excluding BNSF's cash and adjusting for Treasury bills purchased but not yet paid for, a metric favored by Berkshire, the company's cash declined 3.8% to $359.2 billion.

Part of that spending was for $4.5 billion of Berkshire share buybacks. The repurchasing came in below the low end of Barron's rough estimate of $5 billion to $11 billion and is less than UBS analyst Brian Meredith's $8.5 billion forecast. But it is still significantly more than the $235 million Berkshire spent during the first quarter, and that was the first time it did any buybacks at all since 2024.

CFRA Research's Cathy Seifert tells Bloomberg, "People are going to be encouraged by the buybacks. It's also Greg's way of taking the helm and asserting himself." Gabelli Funds portfolio manager Macrae Sykes is also positive on the move, telling CNBC, "Material repurchases provide confidence for shareholders that some of the best corporate capital allocators see current value."

And the buying may have continued. By comparing Berkshire's outstanding shares as of July 29, as shown in its Q2 report, to its shares as of June 30, Barron's now estimates Berkshire spent another $3.4 billion on buybacks in July. Much of that presumably came before the stock's rally near the end of the month.

Abel wasn't just spending money on Berkshire shares. In another major change, Berkshire bought more equities than it sold overall, for a net increase of $20 billion. That would also include the $10 billion investment in Alphabet, Google's parent, that was announced in June. It had been a net seller for the past 14 quarters.

Overall, operating earnings increased 16% to $12.98 billion with strong numbers from Berkshire Hathaway Energy (up 27%) and the BNSF railroad (up 6%). Manufacturing, service, and retail earnings increased 24% to almost $4.5 billion. Insurance, however, wasn't as good, with underwriting earnings falling 13% and insurance investment income dropping 9%. GEICO was a particularly weak spot, with underwriting profits falling 45%.

Gabelli's Sykes, however, remains encouraged. "Despite more difficult insurance industry back-drop, the company continues to build shareholder net worth in Greg Abel's first year as CEO."

Berkshire Hathaway trimmed its position in DaVita a few days before shares of the dialysis provider gave back a chunk of their sizable year-to-date gains.