Warren Buffett's Berkshire Hathaway on Saturday reported a solid gain in operating profits in the second quarter while nearly halving its Apple stake over that period. The conglomerate slashed its position in Bank of America in July.
Berkshire stock undercut a key level on Monday. Apple stock tumbled with Bank of America shares also falling amid a broader stock market rout on recession fears.
Berkshire Hathaway Earnings
Berkshire Hathaway earnings rose 15.5% on an operating basis to $11.6 billion, fueled by insurance underwriting and interest income.
Total net profit fell to $30.3 billion from $35.9 billion a year earlier.
In the first quarter, operating earnings jumped 39% to $11.222 billion, fueled by big gains in insurance underwriting and insurance investment income. Net income plunged 64% to $12.702 billion in Q1.
Warren Buffett advises Berkshire investors to focus on operating earnings, which show how the company's wholly owned businesses are doing. That's because net income includes fluctuations in investment gains or losses in Berkshire Hathaway's stock portfolio, worth roughly $350 billion.
Warren Buffett Nearly Halves Apple Stock Stake
Warren Buffett's Berkshire Hathaway disclosed that it held $84.2 billion worth of Apple stock as of June 30. That implies a 49.4% reduction in the iPhone maker in the second quarter.
Warren Buffett and his investment team slashed Berkshire's massive Apple stake by 13% in Q1. Berkshire trimmed its Apple stake in Q4 2024. Apple stock has soared since Buffett first bought it in Q1 2016.
The conglomerate made a hefty cut to its position in Bank of America in July, dumping shares worth $3.8 billion in a 12-day selling spree, filings showed. That was the first cut in years and followed a solid run for the stock in the first half of 2024.
At the start of 2024, the iPhone maker and Bank of America were Berkshire Hathaway's biggest stock holdings, both by market value and number of shares. They remain among the biggest stock holdings after the recent cuts.
More details of Buffett's Q2 stock buys and sells are likely to come in a 13F filing on Aug. 14.
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Share Buybacks, Cash Levels
Berkshire Hathaway bought back just $345 million worth of its own stock in Q2. In Q1, Berkshire bought back $2.6 billion of its own shares, up from $2.2 billion in Q4 2023.
Cash levels soared to $277 billion from $189 billion in Q1, largely on the Apple stock sale. Berkshire's cash hoard was $167.6 billion in Q4 2023 and $157.2 billion in Q3.
Warren Buffett remains on the hunt for a major acquisition target while Berkshire's cash haul swells. But he's not in a rush.
"We'd love to spend it, but we won't spend it unless we think they're doing something that has very little risk and can make us a lot of money," the Berkshire chief said in May.
In 2019, he lamented: "Prices are sky high for businesses possessing decent long-term prospects."
The first quarter this year marked the first shareholder meeting without Buffett's longtime No. 2, Charlie Munger, who died last year.
Vice Chairman of Non-Insurance Operations Greg Abel, Buffett's designated successor, may answer questions with Buffett on Saturday.
Berkshire Stock
Class B shares of Berkshire stock slid 3.3% to 414.07 in Monday's stock market trading, slicing below the 50-day moving average.
Berkshire shares fell below their 21-day moving average last week, as well as a 430 flat-base buy point.
Apple stock tanked below the 50-day line on Monday before paring losses to 4.8%. Bank of America stock dropped 2.5%, finding support at the 200-day line.
