Berkshire Hathaway's Q2 revenue shows steady growth and a larger stock of cash
With that in mind, here's an overview of the company's second quarter results and what investors need to know.
Warren Buffett speaks to reporters.
Image source: The Motley Fool.
The heading number, with a great reminder
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – -sm" type = "text" content = "Berkshire Hathaway earned $ 5.74 per class B share for the second quarter, up 18% during the second quarter of 2018. However, one big caveat to keep in mind. Berkshire's revenue includes unrealized gains from the company's massive stock portfolio. "data-reactid =" 26 "> Berkshire Hathaway earned $ 5.74 per share in Class B for the second quarter, up 18% during the second quarter of 2018. However, one big caveat to remember on. Berkshire's revenues include unrealized gains from the company's massive equity portfolio.
The S&P 500 increased by 4% for the quarter, and some of Berkshire's top holdings performed quite well. In total, Berkshire revenue included $ 7.77 billion in capital gains for the quarter, significantly higher than $ 5.12 billion in the same quarter a year ago.
How did Berkshire's business really work?
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Even Warren Buffett acknowledges that the numbers in Berkshire per share is quite meaningless [19459031SoosostoneraidshowBerkshire's businesses performed. "Data-reactid =" 29 "> Even Warren Buffett acknowledges that Berkshire's earnings per share is quite meaningless. So let's take a quick look at how Berkshire's businesses performed.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Total revenue generated by Berkshire's operating activities increased 2 , 3% year over year to $ 63.6 billion, and Berkshire's operating revenue came in at $ 6.14 billion, a reduction of about 11% from the second quarter of 2018, but a 10% increase over first quarter of 2019. The decline year over year was partly due to lower insurance revenue from Berkshire's insurance business. "data-reactid =" 30 "> Total revenue generated by Berkshire's operating activities increased 2.3% year on year to $ 63.6 billion. And Berkshire's operating revenues came in at $ 6.14 billion, a reduction of about 11% from the second quarter of 2018, but a 10% increase over the first quarter of 2019. The year-over-year decline was partly due to lower insurance revenue from Berkshire's insurance business.
Cash, cash and more cash
<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8 em) – sm" type = "text" content = " At the end of the second quarter, Berkshire Hathaway had $ 122.4 billion in cash and the balance sheet, up from $ 114.2 billion at the end of the first quarter which is the highest cash demand of the company and indicates that The company again had trouble finding attractive ways to distribute capital in the second quarter, both in terms of stock market and acquisitions, and Buffett likes Berkshire to keep $ 20 billion in cash at all times, so it can translate to over $ 100 billion in usable cash. "Data-reactid =" 32 "> At the end of the second quarter, Berkshire Hathaway had $ 122.4 billion in cash and the balance sheet, up from $ 114.2 billion at the end of the first quarter . This is the highest cash demand of the company, indicating that the company once again had trouble finding attractive ways to distribute capital in the second quarter, both in terms of the stock market and acquisitions. Buffett likes that Berkshire holds $ 20 billion in cash at any one time, so that equates to over $ 100 billion in usable cash .
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "We already know that Berkshire significantly increased its Bank of America (NYSE: BAC) but it is unclear whether that investment occurred before or after the end of the second quarter, and Berkshire committed $ 10 billion to invest in Occidental Petroleum (NYSE: OXY) but this deal has not yet been finalized. "Data-reactid =" 33 "> We already know that Berkshire significantly increased its stake Bank of America [19659003] (NYSE: BAC) but it is unclear whether the investment occurred before or after the end of the second quarter. And Berkshire pledged $ 10 billion to invest in Occidental Petroleum (NYSE: OXY) but this deal is yet to be finalized.
Berkshire's cash could of course have increased because the company decided to sell a significant amount of stock, and it appears that Berkshire was actually a stock seller during the quarter. The company reported a total cost base of $ 102.6 billion for its equity securities at the end of the second quarter, down from $ 102.9 billion at the end of the first quarter.
However, the biggest contributing factor to Berkshire's growing cash is that good investment opportunities remain elusive. We get more clarity on this when Berkshire's 13F filing is released on August 15.
The buybacks were much lower
In addition to not finding any common stock or acquisitions during the second quarter, Berkshire was also far less aggressive when it came to buying back its own stock.
For the second quarter, Berkshire bought back just over $ 400 million in stock, a sharp decline from the $ 1.7 billion dollar company spent in the first quarter. The company paid a weighted average of $ 306,933 for the 281 A shares it purchased and $ 201.50 for the 1,766,140 A shares it purchased during the period.
The point of the second quarter of Berkshire
As I mentioned, there were not too many big surprises. If anything, investors may be disappointed that Berkshire failed to spend more cash to spend in the quarter on stock purchases, acquisitions and repurchases. However, Berkshire's businesses appear to be performing well, and the company now has an even more massive stock of cash to take advantage of opportunities that may arise.
It is also important to emphasize that since so much of Berkshire's value lies in the stock portfolio, there is still more information to learn about the company's quarter. When Berkshire releases its updated 13-F filing on August 15, we will find out more about the key features the company made in its equity portfolio.
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<p class =" canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Matthew Frankel, CFP owns shares in Bank of America and Berkshire Hathaway (B shares). Motley Fool owns shares in and recommends Berkshire Hathaway (B shares) Motley Fool has the following options: Short January 2021 puts $ 200 on Berkshire Hathaway (B shares) and long January 2021 $ 200 calls Berkshire Hathaway (B shares) Motley Fool has a disclosure policy . ] "data-reactid =" 54 "> Matthew Frankel, CFP owns Bank of America shares and Berkshire Hathaway (B shares). Motley Fool owns shares in and recommends Berkshire Hathaway (B shares). Motley Fool has the following options: short January 2021 $ 200 infringes Berkshire Hathaway (B shares) and long January 2021 $ 200 calls Berkshire Hathaway (B shares). Motley Fool has a disclosure policy.
<p class = "canvas atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "This article was originally published on Fool.com "data-reactid =" 55 "> This article was originally published on Fool.com
