Berkshire Hathaway (NYSE: BRKA)(NYSE: BRKB) ended June with roughly $365 billion in cash and U.S. While that's less than the $380.2 billion three months earlier, it still leaves new CEO Greg Abel with an enormous amount of money to work with. And this latest report makes it clear he's not shy about putting it to work.
This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia.
Continue » During the second quarter, Berkshire became a net buyer of stocks for the first time in 14 quarters, buying nearly $20 billion more than it sold. The company also, once again, spent a significant amount of cash buying back its own shares -- $4.5 billion. And after the quarter ended, the company completed a $6.8 billion acquisition of the homebuilder Taylor Morrison and reportedly bought back even more shares -- more than $3.3 billion.
So, is Abel simply more aggressive than Warren Buffett? The clearest difference so far is activity. Buffett spent his final several quarters as CEO selling stocks and allowing Berkshire's cash pile to climb, while Abel's second quarter broke that pattern decisively.
Still, Abel appears to be using Buffett's rule book, by and large. He continues to stress that Berkshire evaluates all of its deals -- acquisitions, stock purchases, buybacks -- with one clear measuring stick: Does this increase the company's intrinsic value per share? In other words, does it maximize what the business is really worth, divided by its total shares, over the long haul?
He's also emphasized maintaining a "fortress-like" balance sheet and said that Berkshire doesn't need to spend money simply because it has it. The faster pace as of late may simply mean that Abel sees more opportunities in the market, rather than revealing a more reckless attitude than Buffett had. I think the more meaningful change may come not in how Abel thinks about investing, but in how Abel thinks about managing Berkshire's own businesses.
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