Warren Buffett Is Still Playing Defense In The Stock Market

Warren Buffett remained a net seller of stocks and slowed the pace of Berkshire Hathaway share repurchases in the second quarter, even as the overall market continue to march higher.

On Saturday, the holding company released its Q2 report, which revealed net stock sales of $1.1 billion. While that's down from $3.9 billion in Q1, it marks the third straight quarter of net selling in stocks.

A regulatory filing later in August will detail Q2 buy and sells.

Still, the value of Berkshire's overall stock portfolio swelled 8.7% to $293.8 billion by the end of Q2 from $270.4 billion in Q1, as the S&P 500 and Nasdaq hit fresh highs to close out the quarter.

Meanwhile, Berkshire bought $6 billion worth of BRKB stock in Q2, after repurchasing $6.6 billion in Q1 and a record $27.4 billion in 2020.

After shying away from repurchases for years, Berkshire loosened buyback rules in 2018. And Berkshire Hathaway stock has become one of Buffett's top purchases, with the investing legend calling it "a simple way for investors to own an ever-expanding portion of exceptional businesses."

While aggressively pursuing buybacks, Berkshire stayed quiet on deal-making. Buffett masterminded high-profile M&A deals during and after the 2008 financial crash. But soaring prices, fueled in part by special purpose acquisition companies on the prowl to take private companies public, are keeping Buffett on the sidelines.

Amid the dearth of big acquisitions, Berkshire's cash pile remained elevating, dipped to $144.1 billion inQ2 from a near-high of $145.4 billion in the prior quarter.

Warren Buffett Stocks

Shares of Berkshire Hathaway rose 1.9% to 285.63 in Friday's stock market trading, topping the 50-day line. BRKB stock has a flat base with a 295.18 buy point, according to MarketSmith chart analysis. Friday's move above the 50-day line offered an early entry, if it weren't for the looming earnings. But BRKB stock could be actionable on Monday.

Buffet's stock portfolio remains highly concentrated in a handful of companies. In Q2, 69% of its aggregate value was comprised of Apple ($124.3 billion), Bank of America ($42.6 billion), American Express ($25.1

billion), and Coca-Cola ($21.6 billion).

Berkshire's stock holdings contributed to a 6.8% gain in total Q2 earnings to $28 billion. Excluding the portfolio, operating earnings climbed 21% to $6.69 billion, topping Wall Street estimates for a 10% gain, led by its industrial businesses.

Burlington Northern Santa Fe, one of the largest railroads in North America, reported a 28% earnings gain to $2.22 billion. That came after rival Union Pacific posted a 50% jump in Q2 operating income in July, saying it moved increasing volumes as pandemic headwinds eased.

Insurance operations, including Geico, reported lower profit as claims increased significantly amid increased driving and other activity.

The Q2 report didn't disclose any details on the precise timing of Berkshire's leadership turnover. In May, Buffett confirmed that Greg Abel, who runs Berkshire's non-insurance businesses, will succeed him eventually.