Warren Buffett is out, and Berkshire Hathaway is spending again
AP Photo/Rebecca S. Gratz
- In his waning years as Berkshire Hathaway’s CEO, Warren Buffett was hoarding cash.
- The company had close to $400 billion on hand before Buffett retired earlier this year.
- Now, the new CEO, Greg Abel, is starting to spend it.
Berkshire Hathaway’s exceptionally deep pockets are getting shallower under its new CEO, Greg Abel.
In its latest earnings report on Saturday, the company said it ended June with $365.5 billion in cash and Treasury bills, a noticeable dip from the $397.4 billion recorded at the end of March.
The company’s net income, meanwhile, reached $25.6 billion, more than double the $12.3 billion recorded the same time last year.
The company said the cash went toward repurchasing its own shares and buying stocks. The last time Berkshire Hathaway bought more stocks than it sold was in 2022. The Coca-Cola Company, American Express, Bank of America, Alphabet, and Apple are among its largest holdings.
The firm also completed its acquisition of Taylor Morrison Home Corporation on July 24, but did not provide a valuation in the report.
Berkshire Hathaway’s decision to dip into its massive cash pile marks a new chapter for the firm, which had been hoarding cash in the years leading up to former CEO Warren Buffett’s retirement last December.
Abel officially took the helm in January. In a February letter to shareholders, Abel said Berkshire Hathaway uses shareholders’ capital on opportunities where the reward matches the risk.
“When we expand existing operations, acquire new operating businesses, invest in equity securities, and repurchase Berkshire stock, we evaluate each opportunity based on its potential to grow Berkshire’s intrinsic value per share over a time horizon measured in perpetuity,” he said.
Abel said Berkshire Hathaway is proud of its “nimble culture,” which lets it consider and make thoughtful investments.
“Many times in Berkshire’s history, some observers have suggested that our substantial cash position signals a retreat from investing. It does not. We continue to evaluate many opportunities and will remain patient and disciplined in pursuing the right ones for the benefit of our owners,” Abel wrote.