Warren Buffett’s Berkshire Hathaway Inc. spent a record $5 billion buying back Berkshire’s own stock in the second quarter.
Berkshire’s Class A shares, which fell in line with the S&P 500 in the first three months of the year as the pandemic spread in the US, fell another 1.7% last quarter while the broader index rallied 20%. Buffett said in May that repurchases weren’t more compelling, but the buybacks in the quarter suggest his thinking shifted.
Even with buybacks that more than doubled the previous quarterly record, Berkshire’s cash pile kept growing and hit $146.6 billion. Buffett has struggled to find ways to deploy large chunks of funds into higher-returning assets.
Berkshire ended up taking a more cautious approach to the broader stock market in the quarter. He sold a net $12.8 billion of shares in the quarter, including dumping his airline holdings in April.
Berkshire’s businesses felt the sting of the fallout from the pandemic, with operating profit slumping 10% in the second quarter. The company also took $10 billion of impairment charges related to its Precision Castparts unit, which has been hit by the slump in air travel amid the pandemic.
Unrealized gains and losses in Berkshire’s massive stock portfolio count toward the bottom line. So the S&P 500’s rally in the second quarter pushed net income to $26.3 billion.
Berkshire Class A shares were down 7.4% for the year through Friday’s close, compared with the 3.7% gain in the S&P 500.