(Another) Weekend At Berkshire’s

I say it every quarter: They always sneak up on me.

“They” means Berkshire weekends.

As even casual readers can readily surmise, I don’t generally care what any industry “legends” have to say, nor do I bother myself with what they were (or weren’t) buying (or selling) last quarter.

Have you ever been to a party and experienced an acute sense of dread when you realize that one of the other invitees is about to start singing or, worse, playing a string instrument they brought along? If so, you know what it’s like to be so embarrassed for someone else that you literally can’t stay in the room. That’s how I feel when I see anyone over the age of, say, 20, fawning over the occupants of investing’s Mount Olympus. The most obsequious of such behavior is reserved for Warren Buffett.

Unfortunately, you can’t not mention Berkshire’s “earnings” (and that term is something of a misnomer in this context). So, here we are, taking a few valuable minutes away from another weekend to marvel at an accounting statement issued by Nebraska’s favorite granddad. For what it’s worth (which is a lot, monetarily anyway), Berkshire’s net income was $28.1 billion in Q2 (figure below).

That giant, ~$50 billion “paper” loss from Q1 2020 is what happens when you run a de facto hedge fund and stocks crash.

Buffett of course prefers people don’t pay attention to net income because it’s prone to wild swings. Operating income was $6.69 billion in Q2, up 21% YoY.

The buyback spree continued. I’d say “unabated,” but that wouldn’t be quite accurate. The pace slowed to just over $6 billion, the least since Q2 of 2020 (figure below), but still the fourth-most in at least three years.

I doubt there’s much one can surmise from that, other than that Buffett and Munger apparently think the stock is still trading below intrinsic value, “conservatively determined,” as they always put it.

Berkshire was a net seller of other stocks — again. The conglomerate sold a net $1.1 billion over the period (figure below).

In remarks to Bloomberg Saturday, one Berkshire investor who oversees $10 billion described that as “housekeeping.”

Whatever it is, it’s not a lack of dry powder. A quick run through the usual math shows Berkshire’s cash pile stood at $144.06 billion as of June 30. That was down what, in Berkshire terms, amounts to spare change versus Q1 (figure below).

The 10Q included some perfunctory commentary around COVID. “The extent of the effects over longer terms cannot be reasonably estimated at this time,” Berkshire said, of the pandemic. “Risks and uncertainties… that may affect our future earnings, cash flows and financial condition include the ability to vaccinate a significant number of people in the US and throughout the world,” the filing said.

I’ll just recycle my usual closing remarks for any and all Buffett articles. I’m steadfast in my contention that everyday investors are too enamored with Warren. It’s not that folks shouldn’t admire what he’s built, it’s just that the tendency for retail investors to believe they can “invest like Buffett” is woefully misguided. Put simply (and “put” is a kind of double entendre there), he runs a massive hedge fund built atop Berkshire’s float ($142 billion in Q2, by the way).

I’d roll out the old “don’t try this at home” quip, but it’s meaningless here because you can’t — try it at home, I mean.