Key takeaways from Berkshire Hathaway’s results

Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) reported its second-quarter financial results to investors on Saturday, revealing that its cash holdings rose to a record level as the company made further cuts to its stake in Apple (AAPL), and that the company’s operating profit rose as its insurance business reported gains and more.

Berkshire’s wealth rose to a record $276.9 billion

Berkshire’s cash and U.S. Treasury holdings rose to another record high in the second quarter, reaching $276.9 billion, including $234.6 billion in Treasury bills. The company’s cash totaled $189 billion in the first quarter.

Buffett has long been a proponent of Treasury bonds, calling them “the safest investment there is” at Berkshire’s annual meeting in May, though the huge size of Berkshire’s growing reserves has sparked speculation about how the company might ultimately use them — or continue to grow them, given that Treasury yields are above 5%.

While the company could expand its portfolio, Buffett suggested earlier this year that few candidates in the U.S. meet Berkshire’s criteria and there are “virtually no candidates” elsewhere, saying the “situation is not attractive.”

The increase in Berkshire’s cash pile came as the company announced it had sold $75.5 billion worth of stock during the quarter. The company used $345 million to buy back Berkshire shares.

Berkshire continues to reduce its stake in Apple

After reducing its stake in Apple by about 13% in the first quarter, Berkshire reduced it even further, saying its Apple stake was worth $84.2 billion at the end of the second quarter, suggesting it had sold about 390 million shares, or almost half of its holdings.

Berkshire also cut its stake in Bank of America (BAC). Although it was not included in Saturday’s report, Berkshire continued to reduce its stake in Bank of America in July, recent filings showed.

Berkshire still has significant stakes in Apple and Bank of America despite the cuts, and those two companies remain the largest holdings in portfolios, although a wild sell-off in Berkshire shares over the past few quarters has raised speculation that Buffett may be worried about the market overheating or is raising cash for successors.

Back in May, Buffett suggested that the early sale of Apple shares came as Berkshire was building its cash position, and said it was “extremely likely” that Apple would still be Berkshire’s largest investment at the end of 2024.

Operating income increased by more than 15% due to improved insurance business

Berkshire’s operating income, which Buffett says provides a better picture of the health of a company’s businesses than net income, was $11.6 billion, up from $11.2 billion in the first quarter and $10 billion a year earlier.

Nearly half of Berkshire’s operating income came from underwriting and investments in Berkshire’s insurance business, as claims and catastrophe expenses fell. Berkshire’s BNSF Railway and Berkshire Hathaway Energy energy businesses weighed on results.

Berkshire Hathaway’s Class B shares have outperformed the S&P 500 so far this year, gaining about 20% year to date and closing at $428.36 on Friday.