Think Warren Buffett, and chances are you’re thinking about acquisitions – the insurance magnate, chairman and CEO of Berkshire Hathaway, having built his reputation as the Oracle of Omaha with his investment strategy. Yet in recent times, Buffett, at least on the surface, appears to have taken a more conservative approach to business – one that has focused on buying back Berkshire shares rather than making dramatic market swoops. If the latest financial figures, released by the business on Saturday, are anything to go by, it appears to be paying off.
The conglomerate reported operating earnings at an eye-catching $6.69 billion across the second quarter – that’s a 21% leap from the $5.51 billion in the same quarter a year ago. In addition, overall earnings increased 6.8% year-over-year to sit at $28 billion.
The figures come after Buffett focused in on repurchasing some $6 billion of the firm’s own stock – in total, Berkshire has picked up a record $24.7 billion of its own stock during the last year, leaving its cash pile at the end of June at $144.1 billion. Its stock has now wiped out all of 2020’s losses.
Still, there is a caveat – the results look particularly striking partly because the business is bouncing back from a difficult year, which saw its operating income fall 10% in the second quarter of 2020. It admits that the impact of the pandemic may loom for some time.
“The COVID-19 pandemic adversely affected nearly all of our operations during 2020 and in particular during the second quarter, although the effects varied significantly,” it said in its earnings report. “The extent of the effects over longer terms cannot be reasonably estimated at this time.
“Risks and uncertainties resulting from the pandemic that may affect our future earnings, cashflows and financial condition include the ability to vaccinate a significant number of people in the US and throughout the world as well as the long-term effect from the pandemic on the demand for certain of our products and services.”
There was an asterisk too, next to the performance of its flagship GEICO brand – the US auto insurer. With America opening up in recent months, and crashes becoming more frequent, underwriting profit for the firm slumped nearly 70% in the second quarter.