An after-tax operating profit of $11.6 billion was made by Berkshire Hathaway BRK.B -0.80% in the second quarter. This was due to higher profits from selling insurance and more income from the company’s large cash reserves.
During that time, the company bought back only $345 million worth of stock. This was one of the lowest quarterly totals seen in a number of years. In the first quarter of 2024, it was $2.6 billion, and in the fourth quarter of 2023, it was $2.2 billion.
On June 30, Berkshire’s total cash rose to a record $277 billion, up from $189 billion on March 31. This was mostly due to big sales of Apple AAPL 0.69% stock during that time. It was during the quarter that Berkshire cut its Apple stake by almost 50%, to 400 million shares. During that time, Berkshire sold $77 billion worth of stocks, mostly Apple AAPL 0.69%
During that time, Berkshire sold $77 billion worth of stocks, mostly Apple shares.
CEO Warren Buffett looks at the company’s cash flow, excluding cash from the railroad and utility companies. In that way, cash was worth $271.5 billion, more than the $182 billion it was worth on March 31.
Barron’s calculated that Berkshire’s operating profit per share, which does not include realized and unrealized investment gains on the company’s stock portfolio, was $8,072 per class A share. This is 16% more than the $6,930 a share made in the second quarter of 2023. It was a lot more than the FactSet FDS 1.43% average of $6,520 per share for operating profit per share.
Class A shares of Berkshire fell 0.9% to $641,435 on Friday, while class B shares fell 0.8% to $428.36.
It made $30.3 billion in the second quarter, down from $35.9 billion in the second quarter of 2023. The numbers show working earnings and a rise in paper profits from Berkshire’s stock portfolio. The biggest gain in Berkshire’s portfolio in the second quarter of 2024 came from Apple. The price of Apple shares went up by more than 20% in the second quarter.
CEO Warren Buffett tells investors to pay attention to operating profits instead of total results, which are often skewed by one-time gains in the equity portfolio.
The book value per share hit a high point of $419,000 per class. A share worth $398,00 on March 31, 2024. It went up because of running profits and the value of Berkshire’s stock portfolio going up, which added up to $285 billion. It is now worth about 1.5 times what it was worth on June 30.
Apple made the most of the portfolio’s gain. When the paper gains on the equity portfolio change, they show up in earnings.
Barron’s estimates that Berkshire didn’t buy back any stock from the end of the second quarter until July 23, which is when the 10-Q report came out. This is based on a comparison of the number of shares on July 23 with the number of shares on June 30.
The after-tax operating profit of $11.6 billion for Berkshire was the highest ever for a quarter. This was due to insurance underwriting profits almost doubling to $2.3 billion in the second quarter.
That gain mostly came from Geico, Berkshire’s auto insurance business. Underwriting profit before taxes jumped from about $500 million a year ago to $1.8 billion, showing that Geico was well on its way to making money again. In force policies went down by 4% during that time. Analysts want Geico’s policy count to start going up again after a sharp drop over the past few years. This would show that the company is growing again.
Geico’s combined ratio dropped from 95% a year ago to 83% in the second quarter. This means that its insurance profit margin was 17% (100 minus 83). For an insurance company, a lower total ratio is good.
Berkshire Hathaway’s investment income rose from $2.4 billion in the first quarter to $3.3 billion in the second quarter. This was due to higher interest income from the company’s large cash situation. Buffett likes to keep most of Berkshire’s cash in U.S. Treasury bills, which are very safe. As of June 30, $235 billion was in Treasury bills, up from $129 billion at the end of the previous year. It has been getting more than 5% on its T bills.
Berkshire holds a lot of T-bills, more than any other company in the world.
Railroad company Burlington Northern Santa Fe made a little less money than a year ago—$1.2 billion after taxes in the second quarter, down from $1.3 billion. Also, Berkshire Hathaway Energy, the company’s big utility business, made $655 million instead of $785 million.
On June 30, insurance float, which is the amount of money that Berkshire spends in insurance contracts, was $169 billion.
About 30% of Berkshire’s $922 billion market value is now made up of cash and cash reserves.
