Happy Monday, investors. The S&P 500 just posted its strongest week since April, and yet the mega-cap tech stocks were not even the ones doing the heavy lifting.
More on that later.
Like every quarter, today we’re unpacking the weekend earnings update from the world’s most famous conglomerate.
Abel and ready
Berkshire Hathaway just bought more stock than it sold for the first time in nearly four years.
Under the guidance of new CEO Greg Abel, the conglomerate purchased $23.5 billion in equities in the second quarter while selling $3.7 billion, ending a 14-quarter streak of net selling.
Its legendary cash pile also fell from $397.4 billion to $365.5 billion to mark its steepest quarterly drawdown since 2022.
About $4.5 billion of that went into Berkshire’s own stock, with Warren Buffett’s successor proving his willingness to not only buy equities at current prices but deepen his bet on his own share price just two quarters into the job.
His flashiest bet so far has been the $10 billion investment in Alphabet, taken through a private placement in June.
Berkshire’s position in the Google parent company is now worth about $31 billion, which is about 10% of the larger portfolio but symbolically notable given Buffett’s past criticism’s of the stock.
Separately, Abel also closed a $6.8 billion acquisition of the homebuilder Taylor Morrison in July.
According to the latest company filings, Berkshire’s net earnings doubled to $25.7 billion, with about half of that stemming from paper gains on its equity book rather than operating profits.
Additional key numbers:
Operating profits rose 16.3% to $12.98 billion, though most of those gains stemmed from currency swings on yen and euro debt
Insurance underwriting fell 14% to $2.18 billion
To be sure, as much as Berkshire’s latest earnings mark a change of direction, its cash pile is still an eye-watering $365 billion. It will likely take years of slow deliberations to significantly move the needle on that capital.
But even so, it’s still the same cash pile that Buffett did not feel comfortable spending on stocks.
Abel is signaling the opposite.
Market snapshot
Elsewhere
💥 President Trump said the US is “low keying it” with Iran. On Sunday he said he’s prepared to allow economic pressure on Iran to mount, as opposed to staging a new military offensive even as the country continues to defy the US. (Axios)
🚀Airbnb stock jumped 15% after one of its strongest quarters in years. CEO Brian Chesky said the company will spend "a lot more" on AI as revenue and bookings blew past estimates and full-year guidance moved higher. (CNBC)
📉 The VIX closed below 15 for the first time in weeks. Wall Street's fear gauge finished Friday at 14.90, down from 20.65 a week earlier, suggesting traders are positioning for a Fed pivot rather than a growth scare. (Yahoo Finance)
📊 Doximity stock surged on an AI-fueled earnings blowout. CEO Jeffrey Tangney said the medical platform's new AI search tool brings in 10 times what it costs to run, sending the stock up more 32% in the last trading session. (CNBC)
Rapid-fire
Iran denied any direct talks with the US on the Strait of Hormuz (CNBC)
Leading US mutual funds and ETFs are up 10.6% on average this year (WSJ)
A top investment chief recommends 2 sectors in case the AI buildout slows down (Full Signal)
S&P 500 earnings revisions are smashing historic records this year (Searching for Signals)
This overlooked AI infrastructure play looks deeply undervalued as the memory boom picks up (Best Ideas Club)
Wall Street’s changed its mind about Big Tech spending (Opening Bell Daily)
JPMorgan upgraded Etsy to overweight on a turnaround thesis worth another 20% upside (CNBC)
On this day
🗓 August 10, 2007: The Federal Reserve injected $38 billion in temporary reserves into the US banking system in three separate operations, an emergency response to the liquidity freeze triggered a day earlier by BNP Paribas suspending redemptions on three subprime-exposed funds.
Last thing
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