Profits Rebound at Warren Buffett’s Berkshire Hathaway

In the quarter, Berkshire reported a $26.7 billion increase in the value of its stock holdings, powered by a $27.7 billion surge in the value of the company’s investment in Apple’s stock, whose price has soared this year even as the global economy sputtered badly.

Berkshire’s stock gains don’t become cash profits until the company sells an investment, which was typically an uncommon occurrence. But in the second quarter, it sold its stakes in airline companies as Mr. Buffett soured on their prospects in the virus-afflicted economy. Overall, Berkshire sold $13.6 billion of equity securities in the second quarter, a jump from $2.1 billion in the first quarter.

Though Mr. Buffett has a long record as a savvy investor, Berkshire’s stock has performed worse than the broader stock market this year, falling 7.4 percent, versus a 3.7 percent increase for the SP 500 stock index.

In a sign that Mr. Buffett might believe Berkshire’s shares are undervalued, the company spent $6.7 billion buying back its own stock in the second quarter, a record amount, and up from $1.7 billion in the first quarter.

During and after the 2008 financial crisis, Berkshire made big investments and acquisitions that ended up producing big returns. But the company has so far only announced one large acquisition during the coronavirus crisis — a $4 billion deal to buy natural gas pipeline assets that was agreed to last month. Berkshire said on Saturday that it expected the deal to close in the fourth quarter.

Article source: https://www.nytimes.com/2020/08/08/business/berkshire-hathaway-earnings-warren-buffett.html