Berkshire Hathaway CEO Greg Abel deploys cash in Google stake and share buybacks
Greg Abel, who succeeded Warren Buffett as CEO, directed Berkshire Hathaway to invest $10 billion in Alphabet and repurchase roughly $4.5 billion of its own shares, while its cash reserves fell to $365.5 billion.
Berkshire Hathaway said it invested $10 billion in Alphabet, the parent of Google, and bought back about $4.5 billion of its own stock during the second quarter, reducing its cash holdings to $365.5 billion from nearly $400 billion at the end of March. The conglomerate also added more than $21 billion of commercial, industrial and other equities to its portfolio, though the specific holdings will be disclosed in a later filing.
Greg Abel, who took over as chief executive in January after Warren Buffett retired, resumed share repurchases that had been paused for over two years. The buyback volume was lower than some analysts’ expectations of $5 billion to $11 billion, but higher than the $234 million repurchased in the first quarter.
"I think there are two key takeaways that should encourage investors: the fact that they bought back shares after not having done things of this magnitude for several years now, and the other positive thing is the ability to produce the 10% operating revenue growth in the quarter," said CFRA Research analyst Cathy Seifert.
Berkshire’s operating profit rose to $12.983 billion, or $9,038.30 per Class A share, up from $11.16 billion a year earlier, while net profit more than doubled to $25.667 billion. The company also completed a $6.8 billion acquisition of homebuilder Taylor Morrison, which closed after the quarter.
The firm’s share repurchase policy is based on the belief that its stock is undervalued, without a predetermined spending target. Berkshire has previously bought back $78 billion of its own shares between 2018 and 2024.