Berkshire Hathaway (BRK.B), the famous conglomerate holding company spearheaded by legendary investor Warren Buffett, is in a strong position, suggests Todd Shaver, editor of the Bull Market Report.
The overall earnings of the company, which comprises the fluctuating values of its equity investments stood at $28 billion, up 7% year-over-year, fueled by buoyant markets and recoveries and reopenings around the world.
However, the gains haven’t yet been realized, as even Buffet himself dissuades investors from paying any attention to it. But we think it is a good metric.
The highly diversified conglomerate saw its holdings in utilities, railroads, and energy sectors making strong gains as the post-COVID world has moved back somewhat to normalcy.
It witnessed strong performance in its homebuilding and paint-making businesses, along with gains in its underwriting business, indicating strong recovery in its core insurance businesses.
The conglomerate, reputed for its outright acquisition of companies has been silent for the past many months, only focused on repurchases of its own stock, which amounted to $6 billion during the second quarter, and $12.6 billion year-to-date, while sitting on a cash-pile of $144 billion, remaining unchanged from last quarter’s levels. (We’ll take the buybacks! Keep it up, Warren.)
Berkshire acknowledged that the stellar results are mainly due to the bounce-back from a low base a year ago, when the pandemic was at its peak, as most of the company’s subsidiaries and insurance underwriting businesses were affected. The conglomerate warned about the risks and uncertainties surrounding newer variants of the virus that could disrupt operations.
Both Buffett and Charlie Munger continue to assert that Berkshire remains undervalued, with cash of $144 billion, debts of $115 billion, and a market cap of $630 billion. We continue to maintain our Target Price at $325, and we have no Sell Price. Indeed, we would never sell these shares.
