The stock prices of three of Berkshire’s biggest investments — Apple, American Express and Bank of America — all fell significantly during the second quarter.
Buffett has long said he believes Berkshire’s operating earnings are a better measure of the company’s performance because they exclude investment gains and losses, which can vary widely quarter to quarter. By that measure, Berkshire’s earnings were up significantly to $9.28 billion, or $6,312.49 per Class A share from last year’s $6.69 billion, or $4,399.92 per Class A share.
The four analysts surveyed by FactSet expected Berkshire to report operating earnings per Class A share of $4,741.64.
Besides investments, Berkshire owns more than 90 companies outright. Berkshire said operating profits were up at all of its major units including its insurance companies, major utilities and BNSF railroad. The strong results at most of its companies offset a $487 million underwriting loss at Geico, which reported bigger auto claims losses because of the soaring value of vehicles and ongoing shortages of car parts.
Berkshire said it was sitting on $105.4 billion cash at the end of the quarter, which was little changed from the $106 billion it reported at the end of the first quarter. That signaled that Buffett wasn’t buying nearly as many stocks during the second quarter although it has reported investing several billion in Occidental Petroleum stock. In the first three months of the year Berkshire spent more than $51 billion on stocks.
Berkshire did spend $1 billion buying back its own shares in the quarter, but the pace of those buybacks has slowed significantly. Berkshire repurchased $3.2 billion of its shares in the first quarter and $27 billion last year. Before this year’s buying spree of stocks such as oil producers Occidental and Chevron, and printer maker HP Inc., repurchases had been Buffett’s biggest investment in recent years as he struggled to find major acquisitions.
Berkshire’s acquisition drought also ended earlier this year when he signed an $11.6 billion deal to acquire the insurance conglomerate Alleghany later this year.