Berkshire Hathaway’s cash pile hits $122bn as profits jump US stock surge lifts Warren Buffett’s equity portfolio but operating earnings fell

Warren Buffett’s Berkshire Hathaway on Saturday reported a jump in second quarter net profits and said its cash pile swelled to a new high, as the broader US stock market lifted the value of its multibillion-dollar equity portfolio.

The sprawling investment conglomerate said profits in the second quarter climbed 17 per cent from a year earlier to $14.1bn, or $8,608 per class A share. The company attributed just under $8bn of its profits in the period to swings in financial markets and the sales of some of its securities, which offset lower insurance underwriting profits in the three months to June.

Berkshire’s cash pile also continued its ascent, reaching a record $122bn in the period, while the value of its stock portfolio rose above the $200bn mark. Mr Buffett has struggled to clinch a significant takeover in recent years. In a letter to shareholders in February he warned that prices for businesses were “skyhigh” and that the group is likely to invest in stocks as it hopes for an “elephant-sized acquisition”.

Instead the group spent roughly $442m in the quarter buying back its own stock, lifting repurchases in the first half of the year of class A and B common stock to $2.1bn. The share

buybacks are now closely watched by investors and analysts, with some hoping Berkshire will accelerate its repurchases.

James Shanahan, an analyst with Edward Jones, said investors have been disappointed by the “lack of activity” at Berkshire recently; it last clinched a major takeover more than three years ago. Even after its $10bn investment in Occidental Petroleum to fund the oil group’s purchase of rival Anadarko is completed later this year, Berkshire’s cash pile could still be higher than year-ago levels come December, Mr Shanahan added.

“The inability to identify attractive operating companies to acquire…that is a problem that has persisted for a long time,” he said. “This cash balance growing out to a new record level is frustrating to a lot of investors, but they have been taught over decades to appreciate the management team will be cautious and wait for opportunities.”

The headline figures accompanied operating results from Berkshire’s dozens of businesses that point to weakness in the US economy. Operating earnings at Berkshire fell 11 per cent to $6.14bn in the three months to the end of June, partly weighed down by higher expenses at its insurance unit Geico and declining agriculture and consumer products shipments on its BNSF railroad.