3 weeks ago
Berkshire Hathaway's New CEO Greg Abel Puts Cash to Work
Berkshire Hathaway is a very big company that owns lots of other companies, like insurance, railroads, and energy businesses.
For a long time, a famous investor named Warren Buffett was in charge.
This year, Buffett retired and a new boss named Greg Abel took over.
Berkshire keeps a huge pile of cash, like a giant piggy bank.
Abel decided to put some of that cash to work.
He gave $10 billion to Google's parent company to support its artificial intelligence investments.
Berkshire also bought back about $4.5 billion of its own shares, which means the company buys its own stock to help investors.
Because of these moves, the company's cash pile shrank to $365.5 billion, but it is still enormous.
Berkshire also bought a homebuilding company called Taylor Morrison.
The company made a lot of money this quarter, and its overall profit more than doubled.
Berkshire Hathaway's new CEO Greg Abel invested $10 billion in Alphabet, Google's parent company.
Berkshire repurchased about $4.5 billion of its own shares, its largest quarterly buyback since 2021.
The company's cash holdings fell to $365.5 billion from nearly $400 billion at the end of March.
Operating earnings rose to nearly $13 billion in the second quarter, up from $11.16 billion a year earlier.
Berkshire also completed a $6.8 billion acquisition of homebuilder Taylor Morrison, which closed in July.
- Who
- Berkshire Hathaway's new CEO Greg Abel, with chairman Warren Buffett still involved in decisions.
- What
- Berkshire invested $10 billion in Alphabet and repurchased about $4.5 billion of its own shares, shrinking its cash pile.
- Where
- Omaha, Nebraska, where Berkshire Hathaway is based.
- When
- During the second quarter, with earnings reported Saturday morning.
- Why
- Abel is putting the company's cash pile to work, and Berkshire only buys back shares when executives believe they are selling for less than they are worth.
Investors Expect More
Discipline Pays Off
Buyback pace
Investors Expect More
Investors were underwhelmed because repurchases came in at the low end of the $5 billion to $11 billion range that Buffett watchers had predicted.
Discipline Pays Off
The $4.5 billion buyback was the largest quarterly payout since 2021 and shows Berkshire is serious, with purchases made only when shares are seen as undervalued.
Stock performance
Investors Expect More
Berkshire's Class B shares rose only 3.8% this year, far behind the S&P 500's roughly 13% gain.
Discipline Pays Off
Abel has been praised by shareholders for his leadership halfway through his first year, and he has sealed back-to-back multibillion-dollar transactions.
Key facts
- CEO
- Greg Abel (took over in January)
- Chairman
- Warren Buffett
- Cash holdings
- $365.5 billion (down from nearly $400 billion)
- Alphabet investment
- $10 billion
- Share repurchases
- About $4.5 billion in Q2
- Operating earnings (Q2)
- Nearly $13 billion
- Net profit (Q2)
- $25.667 billion
- Taylor Morrison acquisition
- $6.8 billion, closed in July
Quotes
Greg Abel
Chief Executive Officer of Berkshire Hathaway
“The 'intrinsic value' of those shares exceeded their market price.”
livemint.com
Sources
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