- Warren Buffett’s Berkshire Hathaway suffered an 11% drop in revenue in the second quarter, but almost $30 billion in year-on-year investment gains meant its net income surged 86% to $26.4 billion.
- The famed investor’s conglomerate appears to have sold $7.4 billion in stock last quarter, on top of the $6.1 billion it received after selling the “big four” airline stocks in April.
- Berkshire also repurchased $5 billion of its stock last quarter as expected.
- However, its cash pile still ballooned by about $10 billion to $147 billion.
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Warren Buffett’s Berkshire Hathaway reported a surge in profits in the second quarter as the soaring value of its stock portfolio offset weakness across much of its business due to the coronavirus pandemic.
The famed investor’s conglomerate also sold more than just the “big four” airline stocks last quarter, and added about $10 billion to its enormous cash pile.
Berkshire reported an 11% slump in revenues to about $57 billion as sales dropped in both the “insurance and other” and “railroad, utilities and energy” divisions. It also stomached a pre-tax goodwill impairment charge of $10 billion, reflecting the painful impact of the pandemic.
“The government and private sector responses to contain its spread began to significantly affect our operating businesses in March and adversely affected nearly all of our operations in the second quarter,” Buffett and his team wrote in the earnings release.
However, those declines were offset by close to $30 billion in year-on-year investment gains, meaning Berkshire’s net income soared 86% to $26.4 billion.
Selling stocks and buying Berkshire
Buffett dumped more than just the airline stocks last quarter.
Berkshire reported $15.7 billion in proceeds from stock sales in the first six months of 2020. It received $2.2 billion of that amount in the first quarter, and $6.1 billion from its sale of the “big four” airline stocks in April, suggesting it sold an additional $7.4 billion in stock last quarter.
Berkshire will publish its portfolio as of June 30 in a regulatory filing next week, detailing exactly which positions it sold down or exited.
As predicted, Buffett also repurchased $5 billion of Berkshire stock last quarter, a big step up from the $1.7 billion it spent in the first quarter.
However, his company’s cash pile still grew by about $10 billion to $147 billion, after ballooning by around $9 billion in the first quarter.
Berkshire was widely expected to put its cash to work during the coronavirus crash earlier this year. However, the investor highlighted a lack of attractive opportunities at Berkshire’s annual meeting in May, as the Federal Reserve and US Treasury moved quickly to pump liquidity into markets and bail out struggling companies.
Buffett’s inactivity spurred commentators to dismiss him as too old, too scared, and in need of a new strategy.
However, the investor has been more lively in recent weeks. For example, Berkshire struck a $10 billion deal to buy most of Dominion Energy’s natural-gas assets in early July.
Moreover, he spent more than $2 billion buying Bank of America stock over 12 consecutive trading days to August 4, boosting Berkshire’s stake in the bank to almost 12%.
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