Warren Buffett's Berkshire Hathaway sold stocks and didn't snap up bargains even as markets crumbled after ‘Liberation Day'
Warren Buffett's Berkshire Hathaway largely remained on the sidelines last quarter, even as the stock market cratered on President Donald Trump's 'Liberation Day' tariffs and briefly presented steep bargains.
Second-quarter results released on Saturday revealed that the conglomerate was a net seller of stocks for the 11th straight quarter. Berkshire offloaded $6.92 billion during the quarter and bought $3.9 billion.
Meanwhile, Buffett's cash pile kept getting bigger, hitting a fresh high of $344 billion at the end of June, up from $333 billion at the end of March. Berkshire also refrained from stock repurchases for the fourth consecutive quarter.
The legendary value-conscious investor has bemoaned the lack of good deals for years now. That includes possibilities for large acquisitions of companies that could be folded into Berkshire as well as major stock purchases for the portfolio.
At the same time, Buffett has also avoided knee-jerk moves, and the stock market saw a head-spinning plunge and rebound in April as Trump shocked Wall Street with his aggressive tariffs then put them on hold just days later.
During the selloff, the S&P 500 flirted with bear market territory, diving nearly 20% from its prior high. But the index has since shot back up to fresh records.
Still, the swoon also highlighted Buffett's uncanny timing, as he appeared to anticipate a market downturn last year by selling $134 billion in equities in 2024—when the bull market was still raging.
The stock market swings also came as Buffett was contemplating a transition away from his leadership role. In May, he announced that his anointed successor, Greg Abel, should take over as Berkshire Hathaway CEO by the of the year.
While Buffett is expected to stay on as chairman, he may be staying away from dramatic moves to clear the decks for Abel, who had already been taking on a bigger leadership role before May.
Despite his aversion for major purchases lately, Buffett's annual letter to shareholders in February reaffirmed his commitment to staying invested in stocks and companies, even as cash continued to mount.
'Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities—mostly American equities although many of these will have international operations of significance,' he wrote. 'Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.'
Berkshire also reported that its operating earnings, which exclude the impact of its investments, fell 4% to $11.16 billion in the second quarter as insurance-underwriting results weakened. The company booked a $3.8 billion impairment on its Kraft Heinz stake as well, marking down its value to $8.4 billion.
This story was originally featured on Fortune.com
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9 minutes ago
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Every year, the BLS does an additional revision based on actual job counts that are derived from state unemployment insurance records. Those figures cover 95% of U.S. businesses and aren't derived from a survey but are not available in real time. These are the factors that cause revisions Figuring out how many new jobs have been added or lost each month is more complicated than it may sound. For example, if one person takes a second job, should you focus on the number of jobs, which has increased, or the number of employed people, which hasn't? (The government measures both: The unemployment rate is based on how many people either have or don't have jobs, while the number of jobs added or lost is counted separately). Each month, the government surveys about 121,000 businesses and government agencies at over 630,000 locations — including multiple locations for the same business — covering about one-third of all workers. Still, the government also has to make estimates: What if a company goes out of business? It likely won't fill out any forms showing the jobs lost. And what about new businesses? They can take a while to get on the government's radar. The BLS seeks to capture these trends by estimating their impact on employment. Those estimates can be wrong, of course, until they are fixed by the annual revisions. The revisions are often larger around turning points in the economy. For example, when the economy is growing, there may be more startups than the government expects, so revisions will be higher. If the economy is slowing or slipping into a recession, the revisions may be larger on the downside. Here's why the May and June revisions may have been so large Ernie Tedeschi, an economic adviser to the Biden administration, points to the current dynamics of the labor market: Both hiring and firing have sharply declined, and fewer Americans are quitting their jobs to take other work. As a result, most of the job gains or losses each month are probably occurring at new companies, or those going out of business. And those are the ones the government uses models to estimate, which can make them more volatile. Groshen also points out that since the pandemic there has been a surge of new start-up companies, after many Americans lost their jobs or sought more independence. Yet they may not have created as many jobs as startups did pre-COVID, which throws off the government's models. Revisions seem to be getting bigger The revisions to May and June's job totals, which reduced hiring by a total of 258,000, were the largest — outside recessions — since 1967, according to economists at Goldman Sachs. Kevin Hassett, Trump's top economic adviser, went on NBC's 'Meet the Press' on Sunday and said, 'What we've seen over the last few years is massive revisions to the jobs numbers.' Hassett blamed a sharp drop in response rates to the government's surveys during and after the pandemic: 'When COVID happened, because response rates went down a lot, then revision rates skyrocketed.' Yet calculations by Tedeschi show that while revisions spiked after the pandemic, they have since declined and are much smaller than in the 1960s and 1970s. Other concerns about the government's data Many economists and statisticians have sounded the alarm about things like declining response rates for years. A decade ago, about 60% of companies surveyed by BLS responded. Now, only about 40% do. The decline has been an international phenomenon, particularly since COVID. The United Kingdom has even suspended publication of an official unemployment rate because of falling responses. And earlier this year the BLS said that it was cutting back on its collection of inflation data because of the Trump administration's hiring freeze, raising concerns about the robustness of price data just as economists are trying to gauge the impact of tariffs on inflation. U.S. government statistical agencies have seen an inflation-adjusted 16% drop in funding since 2009, according to a July report from the American Statistical Association. 'We are at an inflection point,' the report said. 'To meet current and future challenges requires thoughtful, well-planned investment … In contrast, what we have observed is uncoordinated and unplanned reductions with no visible plan for the future.
