Berkshire, more share buybacks than Alphabet (GOOG)?..."Estimated $11 billion in Q2 purchases"

▲ Berkshire Hathaway (BRK.A·BRK.B)/AI Generated Image

Berkshire Hathaway (BRK.A·BRK.B) is estimated to have bought back up to $11 billion worth of its own shares in the second quarter. If CEO Greg Abel invested more capital into Berkshire itself than into Alphabet (GOOG·GOOGL), it would mark the largest share buyback in the company's history.

According to Nasdaq on August 6 (local time), Abel took office as CEO earlier this year, inheriting $369 billion in cash left by Chairman Warren Buffett. Since then, he has acquired OxyChem and Taylor Morrison, and expanded investments in Japanese insurer Tokio Marine and Japanese trading companies.

After investing approximately $13 billion in Alphabet shares in the first quarter, Abel made a $10 billion private investment in the second quarter. Buffett and Abel noted the potential for Alphabet's artificial intelligence (AI) data center investments to lead to high returns on capital. Alphabet's contracted revenue reached $514 billion, with cloud revenue growth recorded at 82% in the most recent quarter.

However, the largest purchase target in the second quarter may not have been Alphabet, but Berkshire's own shares. Berkshire resumed share buybacks in March, but the amount at that time was only $235 million. Since mid-April to mid-July, the number of outstanding shares has significantly decreased, and Barron's estimated the total buyback amount to be between $5 billion and $11 billion.

Even if only the lower estimated amount of $5 billion was executed, it would represent the largest quarterly shareholder return since 2021. If the upper estimate of $11 billion is confirmed, it would be the largest share buyback in Berkshire's history. Berkshire's share buyback policy only allows repurchases when Abel and Buffett determine that the stock price is below its conservatively estimated intrinsic value. Berkshire's stock price was approximately 1.5 times its book value at the end of Q1, remaining at the lower end of its range since 2024.

The exact amount of Berkshire's share buybacks and Alphabet investments will be confirmed in the Q2 earnings announcement. The disclosed data shows that Abel has been actively allocating the cash left by Buffett since his first year in office, simultaneously pursuing corporate acquisitions, equity investments, and share buybacks.

[Article Summary]

-Berkshire's Q2 share buybacks are estimated to be between $5 billion and $11 billion.

-If $11 billion is confirmed, it would be the largest share buyback in Berkshire's history.

-Abel invested approximately $13 billion in Alphabet in Q1, followed by another $10 billion in Q2.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*