Berkshire Hathaway Beats Estimates for Second-Quarter Profits

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Berkshire Hathaway CEO Warren Buffett.

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Andrew Harrer/Bloomberg

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Berkshire Hathaway‘s
operating profits rose 39% in the second quarter, topping estimates, on strength in the company’s insurance and railroad businesses as well as sharply higher investment income.

The company continued to moderate its pace of share repurchases from elevated levels in 2021, buying back just $1 billion ofstock in the period, down from $3.2 billion in the first quarter and rate of about $7 billion a quarter during 2021.

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Berkshire Hathaway (ticker: BRK/A, BRK/B) had after-tax operatingprofits of $9.3 billion, up from the $6.7 billion in the second quarter of 2021. Profits per class A share increased 43% to $6,312, topping the FactSet consensus of $5,393 per share.

CEO Warren Buffett is price conscious with Berkshire’s stockbuyback and the company didn’t buy any shares in April, when thestock was near a record high. Berkshire also didn’t buy stock in May, but resumed the buybacks later in June.

Berkshire’s class A shares ended Friday at $439,528 afterpeaking in late March at a record $544,000. The stock bottomed in lateJune under $400,000. The stock is down about 2% this year.

Berkshire’s overall after-tax profits showed a loss of $43.8 billion in the second quarter, compared with profits of $28.1 billion in the year-earlier period. This was driven by the drop in the stock market, which depressed the value of the company’s huge equity portfolio. Thatstood at about $328 billion at the end of June, down from $390 billion on March 31. The S&P 500 fell 16% in the second quarter and Apple (AAPL), Berkshire’s largest equity holding, was down over20%.

Changes in the value of the portfolio are included in Berkshire’s learnings based on accounting rules that Buffett has said offer amisleading picture of the company financial health. He tells investors to focus on the operating earnings excluding changes in the value of thestock portfolio. With the rally in the stock market in the current quarter,Berkshire’s third-quarter profits should get a nice boost.

Berkshire dramatically slowed its purchases of equities in the second quarter after a buying spree in the first quarter when the company bought $51 billion of stocks and a net $41 billion after sales. Purchases in the second quarter were $6 billion and sales about $2billion, according to the Berkshire 10-Q that was released inconjunction with the earnings this morning.

Berkshire added slightly to its stake in Apple and Chevron in the second quarter, based on Barron’s analysis of the 10-Q.We calculate that Berkshire bought about four million shares of Apple in the period, bringing its stake to 915 million shares valued at$125.1 billion on June 30. It bought around five million shares of Chevron,
lifting its stake to 164 million shares worth $23.7 billion onJune 30.

Write to Andrew Bary at [email protected]


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