Berkshire shares dip after earnings decline, lack of buybacks disappoint investors
Warren Buffett’s conglomerate Berkshire Hathaway saw a small decline in operating earnings, causing its shares to dip. The company reported a 4% decrease in operating earnings, including those from its insurance and railroad businesses, in the second quarter. While some sectors like railroad, energy, manufacturing, service, and retailing saw higher profits compared to the previous year, a drop in insurance underwriting dragged down overall results.
Following the announcement that Greg Abel will take over as CEO at the end of 2025, Berkshire’s Class A and B shares both fell more than 2% on Monday. The stock has decreased by about 15% from its all-time high in early May.
One surprising move was Berkshire’s decision to write down its underperforming Kraft Heinz stake, resulting in a $3.8 billion loss. This was the first time Berkshire recorded a loss from its 27% stake in Kraft Heinz. Reports suggested that Kraft Heinz was considering a spinoff of its grocery business, leading to two Berkshire executives resigning as directors from Kraft Heinz’s board in May.
Bill Stone, CIO of The Glenview Trust Company and a Berkshire shareholder, noted that the Kraft Heinz investment had been carried on Berkshire’s books for more than its market value for some time. Buffett has admitted that he overpaid for the stake, especially considering the increased competition in the branded food category.
Despite holding a cash hoard of $344.1 billion, near a record high, Berkshire Hathaway continued to be a net seller of stocks for the 11th consecutive quarter, offloading $4.5 billion in equities in the first half of 2025. Additionally, the conglomerate did not repurchase any stock in the first half of the year, even as share prices experienced a significant correction.
Looking ahead, analysts like Kyle Sanders from Edward Jones are hoping for increased investment activity, a potential large acquisition, and share repurchases under Abel’s leadership to boost investor confidence. However, with none of these events occurring in the recent quarter, some view the lack of action as somewhat disappointing for Berkshire shareholders.
