News,  Wealth

Berkshire Hathaway Reports Strong Second Quarter Results, Shares Hit Record High

On August 5, Berkshire Hathaway released its financial report for the second quarter of 2023. After the U.S. stock market continued to rise, Berkshire, the “stock god” Buffett at the helm, also achieved huge profits. Berkshire shares also hit an all-time high of $542,000 this week.

Berkshire Hathaway Class A Stock Trends

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Financial data improved substantially

The overall performance of the US stock market in the second quarter was good. The S&P 500 index rose 8.3% in a single quarter, and the Nasdaq index rose 12.81%. Berkshire’s performance has also improved significantly.

In the second quarter, Berkshire achieved revenue of US$92.503 billion, an increase of 21.4% from US$76.18 billion in the same period last year; net profit of US$35.912 billion, a loss of US$43.755 billion in the same period last year. The company bought $4.57 billion in shares while selling $12.55 billion in the second quarter.

The company’s profit turnaround benefited from investment income. In the second quarter, the investment income of Berkshire’s equity securities holdings also surged in the second quarter. The investment income in the quarter was 24.2 billion US dollars, and the income in the first half of the year was 47.6 billion US dollars. In contrast, due to the Fed’s aggressive interest rate hikes, U.S. stocks plunged into a bear market in the second quarter of last year. In the second quarter of 2022, Berkshire’s “stock speculation” had a huge loss of 53 billion U.S. dollars, and it lost 53.8 billion U.S. dollars in the first half of last year.

Berkshire reiterates that the amount of investment gains and losses in any given quarter is generally meaningless, and the resulting net income per share figure can be extremely confusing to investors with little or no knowledge of accounting rules. misleading. Buffett advocates focusing on the operating profit performance of Berkshire’s specific businesses controlled, including insurance, railroads, utilities, energy and retail.

Buffett’s most valued profit indicator – Berkshire Hathaway’s operating profit in the second quarter was US$10.04 billion, far exceeding market expectations of US$8.04 billion, a year-on-year increase of 6.6% from US$9.42 billion in the same period last year. 8.07 billion U.S. dollars, an increase of more than 24% from the previous month.

In the first half of this year, the company’s operating profit was US$18.11 billion, an increase of 9.2% from US$16.58 billion in the same period last year.

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Awkward positions have not changed much

In its quarterly report, Berkshire announces its major stock holdings. About 78% of the fair value at the end of the second quarter was concentrated in five companies – Apple ($117.6 billion), American Express ($26.4 billion), Bank of America ($29.6 billion), Coca-Cola ($24.1 billion), Chevron ($19.4 billion). In addition, the fair value of Occidental Petroleum shares held is US$13.179 billion, which will be US$12.242 billion at the end of 2022.

In the second quarter of this year, Apple’s stock price, which accounts for nearly half of Berkshire’s stock portfolio, rose 17.6%, credit card company American Express rose 5.6%, Bank of America rose 0.3%, Coca-Cola fell 2.9%, and Chevron fell 3.6% %. As of the end of June, Berkshire had reduced its holdings of Chevron stock by $1.4 billion.

Berkshire does not disclose all its holdings in its quarterly report, but will disclose holdings in more detail in the F13 form disclosed to the U.S. SEC later in August.

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continue to repurchase shares

Berkshire repurchased about $1.4 billion of common stock in the second quarter, adding to the $4.4 billion it repurchased in the first quarter, bringing total share repurchases in the first half of the year to about $5.8 billion.

As of June 30, Berkshire’s cash, cash equivalents and short-term U.S. securities holdings totaled $147.4 billion, a near record high, up nearly 13% or $16.8 billion from the $130.6 billion at the end of the first quarter.

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Berkshire share price hits record high

As U.S. stocks continue to rise, Berkshire’s stock price has also risen. Year-to-date, the company’s stock price has risen by 13.84%, far outperforming the S&P 500 index. This Thursday, Berkshire’s Class A share price hit a record high, reaching a staggering $554,389.

During Buffett’s time at the helm of the company, Berkshire’s Class A shares have never been split, and the current stock price has risen more than 25,000 times from around $20 in 1965 when Buffett took control of the company.

From the market value point of view. Berkshire’s latest market capitalization is about 770 billion U.S. dollars, ranking eighth in the U.S. stock market value, second only to technology giants such as Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta. Buffett holds a 15% stake in Berkshire, and the market value of his holdings has also risen to $118 billion.

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Continue to be bullish on the United States

After the international rating agency Fitch downgraded the U.S. sovereign rating, the U.S. capital market fluctuated for a while, but Buffett expressed his optimism with practical actions. Berkshire Hathaway bought $10 billion worth of U.S. Treasuries on Monday, adding to its previous purchase of $10 billion in Treasuries. “The only question on Monday is whether we buy $10 billion of 3-month or 6-month Treasuries,” Buffett said.

Although Buffett does not think that Fitch’s downgrade of the US credit rating will disturb the US Treasury bond market, he does not deny the rationality of Fitch’s move.

Buffett said the Fitch downgrade touched on legitimate concerns, but it wouldn’t change his view on U.S. Treasuries or the dollar. In its downgrade on Tuesday, Fitch cited governance “erosion” and an expected fiscal deterioration in the U.S. over the next three years.

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