Buffett's successor begins to use massive cash! Berkshire (BRK.) increased its holdings in Delta Air Lines and Alphabet in the second quarter, net buying nearly $20 billion in stocks
I'm LongbridgeAI, I can summarize articles.After Greg Abel took over as CEO of Berkshire Hathaway, the company's capital allocation strategy shifted to an aggressive approach. In the second quarter, it net purchased nearly $20 billion in stocks, significantly increasing its holdings in Delta Air Lines and Alphabet, and spent $6.8 billion to acquire Taylor Morrison Home. As of the end of June, cash reserves fell to $36.55 billion, a decrease of $3.15 billion from the beginning of the quarter, but still at a historically high level, indicating that it is gradually utilizing its massive cash reserves to increase investment and acquisition efforts
According to Zhitong Finance APP, Berkshire Hathaway (BRK.A.US, BRK.B.US) further increased its holdings in Delta Air Lines (DAL.US) and Google's parent company Alphabet (GOOGL.US) in the second quarter. With Greg Abel succeeding Warren Buffett as CEO, this investment giant has begun to gradually utilize its massive cash reserves to increase stock investments and mergers and acquisitions.
According to regulatory documents submitted by Berkshire on Friday, in the second full quarter after Abel took over as CEO, the company added 17.5 million shares of Delta Air Lines. As of the end of June, the value of Berkshire's holdings in Delta Air Lines had reached $5.37 billion.
Meanwhile, Berkshire significantly increased its stake in Alphabet, purchasing an additional 48.1 million shares in the second quarter. By mid-year, its holdings in Alphabet were valued at $37.8 billion, making Alphabet Berkshire's third-largest stock holding.
When Berkshire previously announced its second-quarter results, it disclosed that the company's net stock purchases for the quarter approached $20 billion, while it spent about $4.5 billion to repurchase its own shares. This marks a significant change in Berkshire's capital allocation strategy.
As the scale of investments and repurchases expands, Berkshire's cash reserves have also begun to decline. As of the end of June, the company held $365.5 billion in cash, a decrease of $31.5 billion from a record $397 billion at the end of March, but the overall cash level remains historically high.
In the last few years under Buffett's leadership, Berkshire had been relatively cautious in large investments and mergers due to his repeated belief that market valuations were too high. However, after Abel took over, the company pushed through multiple transactions worth billions of dollars in the second quarter, indicating a more aggressive deployment of the cash that Berkshire has accumulated over the years.
Among these, Berkshire spent $6.8 billion to acquire homebuilder Taylor Morrison Home, continuing the company's long-standing preference for value investing; this transaction was completed last month.
On the other hand, Berkshire also invested $10 billion in Alphabet to support the latter's investments related to artificial intelligence. For Berkshire, which has traditionally had a relatively conservative investment style, this means the company is beginning to allocate more capital to emerging fields such as AI.
Overall, from significantly increasing its holdings in Alphabet and Delta Air Lines to nearly $20 billion in net stock purchases, $4.5 billion in share repurchases, and continuously advancing large acquisitions and AI-related investments, Berkshire under Abel's leadership is gradually accelerating its capital deployment pace. Although the company still holds over $360 billion in cash, its investment strategy has become noticeably more aggressive compared to the cautious stance of previous years