Rick Wilking/Reuters
- Warren Buffett found few bargains in the second quarter, Berkshire Hathaway's earnings show.
- The investor's company sold a net $8 billion of stock, and spent only $1.4 billion on buybacks.
- Berkshire's cash pile grew by 13% to a near-record $147 billion as a result.
Warren Buffett's struggle to find bargains continued last quarter as stocks marched higher, Berkshire Hathaway's second-quarter earnings revealed on Saturday.
The famed investor and his team sold $8 billion of stocks on a net basis last quarter, as they dumped close to $13 billion worth of shares, and bought less than $5 billion worth. They also spent only $1.4 billion on stock buybacks last quarter, down from over $4 billion in the first quarter. That's likely due to Berkshire's stock price rising in the period, making it a less compelling purchase.
Berkshire's cuts to its stock portfolio and slower pace of repurchases meant its cash pile swelled by 13% to $147 billion in the three-month period ended June 30. That's the second-highest figure it's ever reported, and not far off the record $149 billion it held in late 2021.
When the conglomerate's total amount of cash and Treasury bills increases, it generally indicates that Buffett and his compatriots didn't find many deals on the stock market or acquisition front.
Many investors view Buffett's company as a microcosm of the US economy, given it owns a vast number of businesses across many industries. Berkshire's operating earnings rose 7% year-on-year to $10 billion last quarter, as underwriting and investment income from its insurance division surged. Meanwhile, earnings from the BNSF Railway fell, and profits from the energy division were almost flat.
Berkshire received a boost from Pilot Travel Centers, after raising its stake in the truck-stop chain to 80% in January. Pilot contributed about $15 billion of revenue and $114 million of earnings last quarter.
Buffett and his team have markedly slowed their spending this year. They plowed a record $68 billion into stocks last year, or $34 billion on a net basis. They also acquired Alleghany for $12 billion and repurchased almost $8 billion of stock in 2022.
In contrast, Berkshire sold over $18 billion of stock on a net basis during the first six months of this year. It also reduced its net Treasury purchases to about $27 billion last quarter, down from $33 billion in the first quarter.
Buffett told CNBC this week that he wasn't perturbed by Fitch cutting America's credit rating from AAA to AA+, and emphasized that Berkshire was still spending the same amount on Treasuries each week.