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Warren Buffett still doesn’t see anything worth buying in this market.
That’s one conclusion we can draw from Berkshire Hathaway’s earnings report, which it released on a Saturday as always.
During the second-to-last quarter with Buffett as CEO, the conglomerate’s cash pile rose to a record $381.6 billion in the quarter, up from the $347.7 billion seen earlier in the year.
The backdrop to that all that cash:
- Berkshire did not repurchase any shares in the quarter
- It also was a net-seller from its $283.2 billion stock portfolio for the 12th quarter in a row
- It acquired Occidental Petroleum’s petrochemical unit, OxyChem, for $9.7 billion last month, its largest deal since 2022
And as far as its earnings, which encompasses results from businesses like Geico and BNSF Railway:
- Operating earnings: +34 percent from a year ago to $13.49 billion
- Net income: +17 percent from a year ago to $30.8 billion
Insurance underwriting ramped up by more than 200 percent in the quarter, which fueled overall results.
At the end of the year, 95-year-old Buffett will retire after six decades at the helm, passing the baton to Greg Abel.
Back in May, I watched Buffett make his announcement live in Omaha at his final shareholder meeting.
The stock has since dropped 12 percent and lagged the S&P 500.
It’s possible the strength of the conglomerate’s latest earnings reassures investors, though the stock’s recent underperformance suggests the “Buffett premium” is indeed dwindling.
That said, it’s worth remembering that over the last decade Berkshire has had no issue beating the market.
The Buffett-led dominance gets more extreme as you expand the time horizon.
The fact Abel is “already” 63 years old means that he won’t come close to matching Buffett’s longevity as chief executive, though Buffett himself has sung the praises of his successor countless times.
Shareholders appear to still need some convincing.
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Phil Rosen
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