Buffett buys back a record $5.1 billion in Berkshire stock as operating earnings take a big hit

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Warren Buffett

Gerard Miller | CNBC

Berkshire Hathaway announced on Saturday it bought back a record amount of its own stock during the second quarter as the coronavirus pandemic dented operations for Warren Buffett’s conglomerate. 

The company said it repurchased a total of $5.1 billion worth in stock in May and June. Berkshire repurchased more than $4.6 billion of its Class B stock and about $486.6 million in Class A shares.

The share repurchase is the most ever in a single period for Buffett, nearly double the $2.2 billion the conglomerate bought back in the final quarter of 2019. In fact, the amount is slightly more than what Buffett spent buying back Berkshire stock in all of 2019.

Those buybacks come during a tough period for some of Berkshire’s wholly owned businesses as the pandemic thwarted economic activity in the U.S. and across the globe.

Berkshire’s operating profit fell 10% during the second quarter, dropping to $5.51 billion from $6.14 billion in the year-earlier period. The company also took a charge of approximately $10 billion from Precision Castparts, Berkshire’s largest business within its manufacturing segment.

Investors and analysts were bracing for the possibility of Berkshire reporting a strong net income along with weaker operating results

Berkshire is heavily invested in several companies that have rallied since the broader stock market bottomed in late March. Apple — Berkshire’s biggest common stock holding — has nearly doubled since March 23. JPMorgan Chase is up more than 27% over that time period and Amazon has popped more than 66%.

These public-market gains are expected to have driven Berkshire’s net income to record levels. However, Berkshire’s operating results may not be nearly as impressive. 

Berkshire Hathaway owns railroad company BNSF, which could have taken a strong hit from the coronavirus pandemic as much of the economy struggles to reopen. Berkshire’s apparel companies are likely to have struggled during the second quarter as well.

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