Berkshire Hathaway buys back its own shares on Wall Street
New CEO Greg Abel has made a dent in the group’s mountain of cash, but over 4.5 billion has been spent on share buy-backs this quarter
Berkshire Hathaway seems to prefer its own shares to investments in Wall Street-listed companies, although the latter do exist and are significant. The new CEO, Greg Abel, is beginning to make use of the mountain of cash held by the group founded by Warren Buffett, whilst focusing largely on its own capital. Berkshire Hathaway spent around $4.5 billion on share buybacks in the second quarter, offering shareholders the highest quarterly dividend since 2021, thanks to a surge in operating profits. This figure rose by 16 per cent in the three months to June, reaching nearly $13 billion, driven in part by earnings from the conglomerate’s manufacturing, services and retail divisions, as announced on Saturday in a press release by the company based in Omaha, Nebraska.
Accumulated liquidity
The company’s cash reserves fell to $365.5 billion in the second quarter, whilst net share purchases reached nearly $20 billion over the same period, a sign that Chief Executive Greg Abel is investing a greater proportion of the company’s cash. Halfway through his first year at the helm of Berkshire Hathaway, Abel has received praise from shareholders for his leadership.
However, Berkshire’s Class B shares have risen by 3.8 per cent this year up to Friday’s market close, compared with a gain of around 13 per cent for the S&P 500.
Berkshire’s profits are generally closely watched because the conglomerate’s businesses – which range from insurance to railways, and from energy to manufacturing – provide a snapshot of the state of the US economy.
In the first quarter, Berkshire resumed its share buyback programme for the first time in over a year. Earlier this year, Abel had stated that Berkshire had restarted the buy-back programme because the management had found that the ‘intrinsic value’ of these shares exceeded their market price.
