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FRI, AUG 12, 2022
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Berkshire held back even as stocks plunged this spring |
Even though the benchmark S&P 500 stock index fell 16.4% and its Class A stock dropped 22% in April, May, and June, Berkshire Hathaway slowed its purchases of both other company's stocks and its own shares.
Its 10-Q filing for the second quarter indicates net stock purchases fell to $3.8 billion from $41 billion during the first quarter, when the S&P fell only 5%. And it bought back around $1 billion of its own shares in the second quarter, down from $3.2 billion in the first quarter.
Its cash pile barely budged, falling slightly to $105.4 billion as of June 30 from $106 billion as of March 31.
CNBC Pro reports CFRA Research analyst Cathy Seifert thinks Berkshire may be making sure it has enough liquidity as it approaches the expected fourth quarter closing of its $11.6 billion acquisition of insurance company Alleghany.
We won't know specifics on what stocks Berkshire was buying or selling during the second quarter until Monday afternoon, when its 13F portfolio snapshot SEC filing is due.
But based on the values it listed in its 10-Q for its top holdings, it appears Berkshire bought around $500 million of Apple and $650 million of Chevron. |
Strong operating earnings marred by GEICO weakness |
The earnings from Berkshire's operating business rebounded strongly in the second quarter to $9.3 billion, up 39% from $6.7 billion in the same period last year. Revenue increased more than 10% to $76.2 billion.
But GEICO suffered a $487 million pretax underwriting loss as it remained difficult, and expensive, to find car parts for repairs.
The Associated Press quotes Seifert as saying GEICO appears to be having more trouble raising its rates to counter those costs than rivals Progressive and Allstate, so "I definitely thinks that merits watching." |
Is Abel preparing to buy a lot of Berkshire stock? |
Berkshire's 10-Q also reveals that Vice Chairman Greg Abel sold his shares of Berkshire Hathaway Energy to the subsidiary for $870 million in June. That has sparked speculation Buffett's designated successor as CEO may use the money to substantially add to his relatively small holding of Berkshire shares.
Edward Jones analyst Jim Shanahan tells Bloomberg, "Given that he’s going to be the CEO of the company someday, I’d like to see him with substantial skin in the game." |
Berkshire brings Occidental Petroleum stake above 20% |
Berkshire Hathaway reports holding 20.2% of Occidental Petroleum's outstanding shares, after purchasing almost 6.7 million shares for just under $391 million on Thursday and Friday of last week and Monday of this week.
That brings its stake to 188.4 million shares currently valued at $12.4 billion. It has paid a total of $10 billion as its built its holding.
Reuters notes that since it holds more than 20% of Occidental's shares, Berkshire could report a proportional share of the oil company's earnings in its own operating results.
That would potentially increase Berkshire's annual earnings by roughly $2 billion, based on analyst estimates for Occidental. In the first half of this year, Berkshire has reported $16.3 billion of operating profit.
Berkshire could, however, make the case that it shouldn't include Occidental earnings in its results because its stake is passive. |
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BERKSHIRE'S TOP U.S. STOCK HOLDINGS - Aug 12, 2022 |
Berkshire's top holdings of disclosed publicly-traded U.S. stocks by market value, based on today's closing prices.
Holdings are as of March 31, 2022 as reported in Berkshire Hathaway’s 13F filing on May 16, 2022, except for Apple, Bank of America, and U.S. Bancorp, which also include shares held as of Mar 31, 2022 as disclosed in New England Asset Management’s 13F filing on May 14, 2022, and except for Occidental Petroleum, which is as of August 8, 2022.
In addition to U.S. stocks, shares held as of December 31, 2021 of China's BYD, as listed in Buffett's 2021 letter to shareholders, are included. The price of those shares in U.S. trading is used to approximate the current market value of the position. The value of the stake as a percentage of the company's market value is fixed at what was listed as of December 31, 2021 in the letter.
The full list of holdings and current market values is available from CNBC.com's Berkshire Hathaway Portfolio Tracker. |
Please send any questions or comments about the newsletter to me at alex.crippen@nbcuni.com. (Sorry, but we don't forward questions or comments to Buffett himself.)
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-- Alex Crippen, Editor, Warren Buffett Watch |
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