Greg Abel might just be a little looser with the purse strings than Warren Buffett.
Abel, who succeeded Buffett as Berkshire Hathaway’s CEO at the turn of this year, oversaw a drop in the conglomerate’s mountain of cash and Treasury bills from $380 billion at the end of March to $365 billion at the end of June, excluding Treasury payables.
Berkshire opened its coffers to buy $23.5 billion in stocks while selling only $3.7 billion, meaning it purchased nearly $20 billion on a net basis. It had been a net seller for 14 quarters straight. The last time it had a larger net outlay on stocks was in the first quarter of 2022.
Abel also repurchased $4.6 billion of Berkshire stock, marking the company’s biggest quarter for stock buybacks since 2021.
The parent company of Geico, Dairy Queen, and Squishmallows-owner Jazwares reported a 16% year-on-year rise in operating income to $13 billion in the second quarter.
Lower insurance profits were offset by profit growth at BNSF Railway, Berkshire Hathaway Energy, and the manufacturing, service, and retailing division, plus a nearly $1.3 billion foreign-currency exchange gain.
Berkshire completed its acquisition of Taylor Morrison Home Corporation for $8.5 billion in cash on July 24, after the quarter ended.
Ramping up net stock purchases and buybacks marks a change in tempo for Berkshire. Its cash pile roughly doubled during Buffett’s last two years as CEO as the legendary bargain hunter struggled to find them in a red-hot market for stocks and private businesses.
Macrae Sykes, a portfolio manager at Gabelli Funds, said in emailed comments that he welcomed the sizable buyback since it suggested Abel and Buffett — who remains chairman — once again saw Berkshire shares as offering good value for money, and were finding ways to deploy cash.
Abel pledged allegiance to Buffett’s signature approach of disciplined capital allocation in his first letter to shareholders in February, writing that Berkshire pursues opportunities where the reward matches the risk.
Buffett’s successor said he’s proud of Berkshire’s “nimble culture,” which enables it to make considered, thoughtful investments quickly.
“Many times in Berkshire’s history, some observers have suggested that our substantial cash position signals a retreat from investing. It does not. We continue to evaluate many opportunities and will remain patient and disciplined in pursuing the right ones for the benefit of our owners,” Abel wrote.
