Berkshire Hathaway reports third-quarter earnings on Saturday, Nov. 7, with its stock at a record close. The Motley Fool's Daniel Sparks says the cash balance is the figure to check first, after it fell in the second quarter.
Berkshire Hathaway will post its third-quarter earnings release and 10-Q on Saturday, Nov. 7, at around 7 a.m. Central time. The Class B shares finished Nov. 4 at $579.09, a new closing high, after climbing around 4% that day.
Cash fell as Berkshire bought stock
Berkshire finished June with $364.7 billion in cash and Treasury bills, down over $15 billion from $380.2 billion at the end of March. In the second quarter, it bought almost $20 billion more stock than it sold, ending a 14-quarter run of net selling.
A single deal made up a big share of that buying. Berkshire agreed to put $10 billion in Alphabet through a private placement announced on June 1. Without it, net buying would have been almost $10 billion.
Third-quarter spending is partly public
Berkshire has already disclosed two big uses of cash. On July 24, it closed its purchase of homebuilder Taylor Morrison for around $6.8 billion in cash. It also bought back over $3.3 billion of its own shares in July.
Sparks writes that a cash pile coming in a bit below $365 billion may mainly reflect those deals. The 10-Q also shows buybacks by month, and Sparks writes that any buying in August and September may signal CEO Greg Abel still thinks the stock is cheap at higher prices.
What a bigger drop or a rebound would mean
If the pile falls well under $365 billion, Berkshire probably kept buying stocks, its own shares or both after July, according to Sparks. If it rises back toward $380 billion, Sparks says the second quarter may have been a one-time opportunity built around the Alphabet deal.
Sparks adds that the net stock buying in the cash flow statement is arguably the better sign than the cash number alone.
Source: The Motley Fool
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