Berkshire Hathaway Q2 earnings: $13B profit, $20B equity purchases amid investor concerns

As reported by The Economic Times, Berkshire Hathaway became a net buyer of equities for the first time in 14 quarters under new CEO Greg Abel, with the company spending nearly $20 billion on net stock purchases during Q2. The $23.5 billion net outlay on stocks marked the company's first quarter as a net buyer of stocks in more than three years, with the last larger net outlay occurring in the first quarter of 2022. This dramatic shift represents a complete reversal from the previous period when Berkshire sold $172.9 billion more in stocks than it bought between 2022 and 2024. The company also repurchased $4.5 billion of its own shares in Q2, compared with only $200 million in the first quarter, accelerating a buyback programme that had resumed in March after a nearly two-year pause. According to The Economic Times, this marks a significant change from the period when Warren Buffett struggled to find attractive opportunities for Berkshire's cash, with the company having repurchased a record $27 billion of its own shares in 2021. The company continued deploying capital after the quarter ended, spending at least $10.1 billion in July on share buybacks and the acquisition of homebuilder Taylor Morrison.

According to Reuters, Berkshire Hathaway ended June with $364.7 billion in cash and cash equivalents, down from a record $380.2 billion three months earlier. The figure also reflects the $6.8 billion Berkshire spent in July to acquire homebuilder Taylor Morrison, with Berkshire's net purchases of equities approaching $20 billion during the quarter. The company repurchased approximately $4.5 billion of its own shares in Q2, continuing the pace in July with more than $3.3 billion in additional stock buybacks. The increased deployment marks a notable change after years in which Berkshire was relatively cautious about acquisitions and investments under Buffett. High market valuations had often made it difficult for the company to find investments that met its value-focused approach, but Abel has moved more aggressively to put Berkshire's capital to work. The stock buybacks provided shareholders with their largest quarterly payout since 2021, with the firm's cash hoard falling to $364.7 billion from roughly $397 billion in the prior period. The $23.5 billion investment included a roughly $10 billion investment in Alphabet, the parent company of Google and YouTube, with Alphabet becoming one of Berkshire's five largest holdings at the end of the quarter.

As reported by Reuters, Geico's pre-tax underwriting profit fell 45% as accident claims increased and the company spent more on advertising to attract customers, with overall profit from Berkshire's insurance and reinsurance businesses falling 11%. However, BNSF Railway's profit rose 6.3% to $1.6 billion amid higher shipping volumes, despite higher fuel costs, with BNSF CEO Katie Farmer working to improve operating margins. Berkshire Hathaway Energy reported a 27% increase in profit to $891 million, helped by stronger utility margins and tax credits. Over the period, net income at the conglomerate's collection of manufacturing, service and retailing units jumped 24% to $4.5 billion, while profits at Berkshire's utilities business surged 27%. Despite the stronger quarterly results, Berkshire's Class A shares have underperformed the S&P 500 since Abel's succession was announced in May 2025, gaining 3% in 2026 compared with a 13% rise in the S&P 500. According to CFRA Research analyst Cathy Seifert, the decline at Geico more than offset gains at other insurance businesses, resulting in a 13% decline in net underwriting income for the entire insurance group to $1.7 billion, though analysts noted this was "in sharp contrast to what we're seeing at some other underwriters" who are struggling with competition.

Veteran investor Michael Burry, famous for correctly predicting the 2008 financial crisis, has expressed concerns about Berkshire's strategic direction under new leadership. As reported by The Economic Times, Burry stated that his biggest fear for Berkshire Hathaway was that when Buffett finally steps down, his successor would be too old and "otherwise not Warren," and hence he would not have patience for his "fat pitch." "I believe this fear has come true. I do not find Berkshire an attractive investment going forward," Burry wrote in a blog post. He noted that not much of Berkshire's large cash pile has been spent, stating "However, these first steps look to be more framing moves than investment moves." In a recent interview with CNBC, Buffett clarified that it was him, not his successor Greg Abel, who led the conglomerate's massive investment in Alphabet, though he noted that Abel approves of all decisions. "I initiated it," Buffett said, adding that "I am not doing anything that he does not approve of. He is not doing anything I don't approve of. We talk all the time, but he is the decider." The 95-year-old Berkshire Chairman emphasized that Abel has his full support in decision-making, while acknowledging that the $4.5 billion buyback, nearly $20 billion of net equity purchases and the Alphabet investment together show a Berkshire that is becoming more active with its capital under Abel's leadership. Market analysts suggest that the aggressive buyback program signals confidence in the stock's undervaluation, with the $4.5 billion buyback representing the largest quarterly repurchase since 2023, effectively telling the market that Berkshire shares are trading at a discount to their intrinsic value.