Summary
- Berkshire's equity book gained 10.6% to $225.8 Billion, almost entirely on strength from Apple (AAPL).
- Berkshire itself gained 19.3% versus a gain of 8.5% for the S&P500.
- Berkshire repurchased $5 billion of shares in Q2 at an average price around $175.
- Precision Castparts was written down by $10 billion last quarter, adding to the list of disappointing recent investment results.
- Berkshire's cash and short term investments ($146.6B) and Apple investment ($116B) represent greater than half the market cap of $508B!
Berkshire Hathaway (BRK.A) (BRK.B) had an another eventful quarter that that included reducing stakes in JP Morgan (JPM) and Wells Fargo (WFC), adding to Bank of America (BAC), buying Dominion's (D) Gas Transmission and storage assets, as well as purchasing stakes in Japanese trading firms and the Snowflake (NYSE:SNOW) IPO.
The biggest positive from last quarter to me was Berkshire ramping up share repurchases, buying back $5 billion at ~$175/share. Berkshire's decision on repurchasing above $200/share will be an important clue on how management feels about the current valuation.
Q3 Holdings Update
The value of Berkshire's investments in equity securities excluding Kraft Heinz (NASDAQ:KHC) rose 10.6% to $225.8 billion from $204.1 billion, again entirely on strength from Apple (AAPL). This is approaching the $237.7 billion from the end of Q4 2019.
From the ~$21.7 billion gain, after increasing the liability for future income taxes on the balance sheet as "Income taxes, principally deferred" and subtracting 21%, we see a net book value gain of $17.1 billion for Q2.
Some other interesting moves in the past quarter
- Increased Bank of America (BAC) by $2.1B to $22.5B.
- Reduced stake in Wells Fargo (WFC) from $8.8B to $3.1B.
- Reduced stake in JP Morgan (JPM) from $5.4B to $2.2B.
- Initiated a large stake in Snowflake (SNOW) for ~$750 million at the $120 IPO price (currently worth double that.)
Tracking Berkshire's portfolio used to be more interesting, but at this point, ~75% of the portfolio is concentrated in four companies: American Express (NYSE:AXP) at $15.1B, Apple (AAPL) at $116.2B, Bank of America (NYSE:BAC) at $24.8B, and Coca-Cola (NYSE:KO) at $19.7B.
Berkshire made two additional large investments this quarter
