Class A shares of Berkshire Hathaway (NYSE:BRK-A, NYSE:BRK-B) jumped to a fresh all-time high following a solid showing for the company’s second-quarter earnings report. In particular, a surprisingly strong performance by its insurance division and “strong gains in its massive investment portfolio” are helping undergird BRK-A stock. Even better, CEO Warren Buffett has signaled optimism for the economy despite seemingly worrying storm clouds.
According to The Wall Street Journal, Berkshire Hathaway posted net income of $35.9 billion for Q2. This figure translated to $24,775 per Class A share. In contrast, the conglomerate incurred a loss of $43.8 billion (or $29,754 per Class A share) in the year-ago quarter.
Notably, Berkshire’s insurance business Geico “recorded higher average premiums, lower advertising costs and a reduction in prior accident years’ claims estimates.” That’s a huge lift for Warren Buffett and BRK-A stock shareholders, as Geico suffered over the trailing year due to elevated claims cost.
Warren Buffett Remains True to His Word
One of the more conspicuous datapoints from the Q2 report was the company’s liquid assets. Per WSJ, Berkshire ended the quarter with $147.4 billion in cash and cash equivalents. For context, at the end of Q1, the conglomerate posted $130 billion in cash and cash equivalents.
What’s more, the cash pile “mostly contains holdings of short-term U.S. Treasury bills and is nearing record levels.” Fundamentally, this framework supports a prior statement made by Warren Buffett: “Never bet against America.”
Back in 2021, the “Oracle of Omaha” declared in his annual letter to Berkshire shareholders to continue holding the line regarding U.S.-based assets. That statement took on an acid test just a year later when investment declines due to tanking equities and bond markets imposed heavy losses on Berkshire’s portfolio.
Even with Fitch Ratings downgrading the U.S. long-term foreign currency rating to AA+, though, Buffett appears unfazed.
Why It Matters
At the moment, analysts have a consensus rating of a “moderate buy” for BRK-A according to TipRanks. This assessment breaks down as one “buy” and one “hold” within the past three months. However, within the trailing year, the assessment widens slightly to three “buy” ratings and one “hold.” The highest price target of $621,591 implies more than 12% upside potential.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
