Berkshire Q2 Net Profit Doubles After Buffett’s Retirement as Abel Increases Stock Buybacks and Investments

TradingKey - After Gregory Abel took over as chief executive of Berkshire ( BRK.a )(" BRK.b ), the investment conglomerate built by Warren Buffett began to gradually change its previously cautious pace of capital allocation: on one hand aggressively repurchasing its own stock, and on the other becoming a net buyer in the stock market again after more than three years, while also continuing to push forward with large-scale acquisitions.

Berkshire released its second-quarter earnings report for 2026, showing that the company's total revenue for the quarter reached $101.808 billion, up about 10% year-over-year; net income attributable to shareholders was $25.667 billion, up about 107% from $12.37 billion in the same period last year, nearly doubling.

On a Class A share basis, quarterly earnings per share reached $17,868, compared with $8,601 in the same period last year. According to FactSet data, the market had previously expected Berkshire's net income to be approximately $10.6 billion, so the actual performance significantly exceeded expectations.

Cash Reserves Fall for First Time as Buybacks Increase Significantly

As of the end of June, the company's cash and U.S. Treasury holdings fell to approximately $365.5 billion, a significant decline from nearly $397.0 billion at the end of the first quarter. This marks Berkshire's first quarter-on-quarter decline in cash reserves in four years.

One key use was share repurchases.

In the second quarter, Berkshire repurchased a total of approximately $4.527 billion of its stock, of which about $350 million was used to buy back 478 Class A common shares, and another $4.18 billion was used to buy back approximately 8.6 million Class B shares. In contrast, the company repurchased only about $235 million of stock in the first quarter; therefore, the scale of buybacks in the second quarter expanded significantly, also marking a single-quarter high since 2021.

In terms of repurchase prices, the company's Class A shares were bought back at an average price of approximately $731,400 per share, and Class B shares at an average price of approximately $485.95 per share. As of last Friday's close, the prices of both classes of stock were significantly higher than these levels.

Berkshire does not have a fixed annual repurchase limit. According to the company's previously disclosed principles, buybacks are only conducted when Abel, in consultation with Chairman of the Board Buffett, believes the stock price is below its intrinsic value. Therefore, the expanded scale of second-quarter buybacks was also viewed by the market as a signal of management's greater confidence in its own valuation.

However, Berkshire's Class B shares have recently hovered near record highs. Therefore, whether the company will continue to maintain such high buyback intensity in the future remains dependent on the gap between the stock price and its intrinsic value.

First Net Stock Purchases in Over Three Years

In addition to repurchasing its own shares, Berkshire significantly increased its investment in external equities in the second quarter.

The company purchased nearly $20 billion in shares in the second quarter while selling about $3.7 billion, representing significant net share purchases for the quarter. Cumulatively for the first half of the year, Berkshire bought approximately $39.405 billion in shares and sold $27.78 billion, resulting in a net addition of about $11.6 billion.

This shift is particularly noteworthy because, prior to this, Berkshire had been in a net selling position for 14 consecutive quarters. In other words, after Abel took over, the company has been gradually reducing the massive cash pile accumulated over the past few years and increasing its allocation to equity assets once again.

As of the end of June, the size of Berkshire's equity portfolio was approximately $323.779 billion. Alphabet has entered the company's top five stock holdings, joining American Express, Apple, Bank of America, and Coca-Cola to form its core holdings, which collectively account for about 66% of the equity portfolio.

Among these, Berkshire had previously reached a $10 billion investment agreement with Alphabet. As the relevant transactions progress, Google's parent company has officially become one of Berkshire's core equity assets.

In addition, Berkshire has pushed forward several major transactions this year. At the beginning of the year, the company completed the acquisition of OxyChem, the chemical business of Occidental Petroleum, for a cash consideration of approximately $9.4 billion, and in May announced the acquisition of homebuilder Taylor Morrison for about $6.8 billion. The latter transaction closed on July 24 and was therefore not included in the second-quarter financial data.

Abel Starts Changing Berkshire’s Capital Allocation Pace

During Buffett's final years at the helm of the company, Berkshire maintained high cash reserves for an extended period while reducing stock trading amid elevated market valuations. Now, with Abel taking over, the company has begun to gradually improve its capital deployment efficiency through buybacks, stock investments, and mergers and acquisitions.

This does not mean Berkshire will completely abandon its historically cautious investment principles. On the contrary, the company still emphasizes value investing and intrinsic value; it is just that under Abel's leadership, capital allocation is becoming more active.

Paul Lountzis, president of Lountzis Asset Management, believes that under current conditions of elevated public market valuations and an equally expensive private market, it is difficult to expect Abel to immediately execute large deals. Therefore, investors should give the new management team some time.

As of the end of June, the company was still sitting on over $360 billion in cash and U.S. Treasuries, which means Abel still has vast room for capital allocation going forward.

As of last Friday's close, Berkshire's Class B shares stood at $521.80, rising about 9.6% over the past three months and outperforming the S&P 500 Index's gain of approximately 4.9% over the same period. However, year-to-date, they have risen only about 3.8%, significantly lagging the S&P 500 Index's gain of roughly 13.3%.