, the vehicle of 89-year-old master investor Warren Buffett, published second-quarter results on Saturday. It was particularly noticeable that Berkshire sharply increased its share buybacks to 5.1 billion dollars in the second quarter. It is specifically about the months of May and June.
Berkshire initiated its share buyback program on July 17, 2018. “We buy when we feel the stock price is below net asset value, as determined conservatively by Chairman Warren Buffett and Vice Chairman Charlie Munger. The buyback program is likely to last indefinitely, ”Berkshire expresses the strategy in the press release. The only condition is that the cash position must not fall below $ 20 billion.
When it comes to cash position, Buffett has little to worry about. At the end of June, the counter stood at 146.6 billion dollars, another record. Buffett sold in the second quarter – net – for no less than 13 billion dollars in shares, mainly from the aviation and financial sectors. That’s the largest net sales amount in more than 10 years.
The share buyback program is likely to last indefinitely
It wasn’t until July that Buffett started putting some of his cash to work. He bought $ 10 billion in stocks and bonds in Dominion Energy, the largest deal in five years. With this he wanted to respond to a possible recovery in natural gas prices. Berkshire has also consolidated its position in Bank of America in recent weeks.
Buffett has a difficult investment year. In the second quarter, the Berkshire stock fell 1.7 percent, while the S & P500 recovered 20 percent. That may explain why Buffett mainly put money in its own shares.
In July and August, the Berkshire stock was catching up, which may be explained by the rally in Apple
. At the end of June, Apple was Buffett’s main equity position, accounting for no less than 44 percent of the listed equity portfolio.
In the unlisted part of the portfolio, the insurance activities had a strong quarter. Car insurer Geico was confronted with far fewer accidents due to the corona crisis and the subsequent lockdowns. Geico will give discounts on the premiums in the following quarters. That will have a negative impact on the results.
Since the beginning of this year, the Berkshire stock has been down 7.4 percent, compared to a profit of 3.7 percent for the S & P500.