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What to Expect From Warren Buffett’s Berkshire Hathaway Earnings Saturday

#Expect #Warren #Buffetts #Berkshire #Hathaway #Earnings #Saturday

Key takeaways

  • Investors will be eyeing Berkshire’s cash pile, which reached a record high last quarter, and the company’s plans to deploy that cash.
  • Despite citing a lack of new investment opportunities, Buffett increased the company’s stake in Sirius XM last quarter.
  • Market watchers will also be looking at how Buffett’s portfolio changes, in light of the public downgrade of Bank of America’s shares.
  • Second quarter operating income was driven by gains in the insurance business with lower claims costs. The health of the insurance business will be in focus in the third quarter.

Warren Buffett’s Berkshire Hathaway (BRK.A) (BRK.B) is scheduled to report its third-quarter earnings on Saturday morning. Here are some things investors will be watching.

Berkshire’s cash stash

Berkshire Hathaway’s cash pile swelled to a record $277 billion in the second quarter, an increase of nearly $100 billion from the previous quarter. The majority of this money, about $235 billion, was invested in US Treasury bonds.

Investors will be looking to this upcoming earnings report for any clues about how Berkshire plans to use or invest its massive war chest. Will Buffett unveil new positions or will the company use the money to buy back shares as it has done in the past?

Buffett said early this year that there were only “a few companies” in the United States that aligned with the company’s value-driven acquisition and investment strategy. Since then, the company has significantly reduced a few key stock holdings.

Kathryn Seifert, a Berkshire analyst at CFRA, expects the company to “continue transactions as it deploys a portion of its $277 billion cash buffer (as of June 30, 2024) amid a low interest rate environment.”

How has Buffett’s portfolio changed?

Despite its halving this year, Apple (AAPL) will likely remain Berkshire’s largest stock position in the third quarter while Buffett continued to sell one of his longtime favorite stocks – Bank of America (BAC).

Berkshire trimmed its position in Bank of America by about 20% to 800 million shares in the third quarter, according to Securities and Exchange Commission filings. It has since sold more shares. These sales reduced Berkshire’s stake in the bank to less than 10%, meaning the company was no longer required to immediately disclose changes in its position.

Buffett reportedly enjoys listening to Frank Sinatra on Sirius XM’s Channel 70. Like many of his other investments in products he enjoys, like Coca-Cola (KO), he’s betting on Sirius XM as well.

In September, Sirius XM and Liberty Media, which hold tracking shares in Sirius Berkshire, which previously owned both Sirius XM as well as tracker shares, ended up with roughly 105 million shares in the new Sirius It raised its stake in October to more than 108 million shares, representing more than a third of the satellite radio provider’s total outstanding shares.

Investors will be curious to see if Buffett changed some of his other important holdings this quarter. He revealed new stakes in beauty products company Ulta Beauty (ULTA) and aerospace and electronics manufacturer Heico Corp. (HEI) during the second quarter.

Operating income, focus on insurance business

Buffett has repeatedly expressed his dislike of traditional earnings metrics, choosing instead to look at operating income to adequately understand the state of Berkshire’s business.

In the second quarter, operating income increased to $11.6 billion, driven primarily by underwriting and investments in the insurance business. The insurance business boomed as disaster-related claims and costs declined.

The volume of disaster-related claims and losses, and the future outlook for the insurance business, will be in focus on Saturday, especially with several major hurricanes hitting the Southeast in recent months.

#Expect #Warren #Buffetts #Berkshire #Hathaway #Earnings #Saturday

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