Berkshire Turns Buyer: What’s Buffett’s Successor Shopping For?

So... bottom’s in?

Berkshire Hathaway BRK.A is probably about as far from the average retail trade as you can get.

Warren Buffett resisted splitting its Class A shares largely because he wanted long-term owners rather than day traders like you jumping in and out. The result is the world's most expensive publicly traded stock on a per-share basis, a badge Berkshire wears comfortably.

Still, retail traders can learn plenty from the conglomerate's latest quarter (ref: Earnings Calendar). After years of trimming stocks and parking cash into short-term Treasuries, Berkshire has finally become a net buyer of equities for the first time since 2022.

And the change arrives under new CEO Greg Abel, who inherited one of the largest war chests in corporate history.

💰 A $397 Billion Fortress

Buffett spent his final years as CEO doing something that requires considerably more patience than chasing the latest market darling: waiting.

Berkshire sold more stocks than it bought for 14 consecutive quarters, steadily building its cash and Treasury holdings as the Oracle of Omaha repeatedly struggled to find attractive valuations. By the end of March, that pile had reached a record $397.4 billion.

That fueled speculation that Buffett was preparing for some gigantic market crash where Berkshire would stroll into Wall Street with a shopping cart while everyone else searched for the exit.

The crash never arrived. The S&P 500 SPX is sitting around record territory instead.

🐘 Abel Opens the Wallet

Under Abel, 64, Berkshire purchased nearly $20 billion more equities than it sold in the second quarter. The company sold only $3.7 billion worth of equities, its smallest quarterly dump since 2022.

Berkshire also spent approximately $4.5 billion buying back its own shares. A buyback reduces the number of shares outstanding, effectively increasing each remaining shareholder's ownership percentage.

Companies generally do this when management believes repurchasing the stock will trigger a broader run to it.

Throw in other investments and the completed acquisition of homebuilder Taylor Morrison, and Berkshire's cash pile dropped to $365.5 billion by the end of June.

🔎 So What's on the Shopping List?

While we do know some stuff now, the full answer is coming later this month when Berkshire reports its detailed quarterly equity holdings to US regulators.

Still, Saturday's disclosures already provided a substantial clue. Berkshire invested roughly $21 billion in "commercial, industrial and other" stocks during the quarter, a category that includes Alphabet GOOGL .

The Google parent has now become one of Berkshire's five largest listed equity positions by market value, joining American Express AXP, Apple AAPL, Bank of America BAC and Coca-Cola KO .

Berkshire disclosed a $10 billion investment in Alphabet earlier this year, with Buffett saying he initiated the position after consulting Abel.

For a company synonymous with railroads, insurance, utilities and Coca-Cola, having one of the world's biggest AI players sitting among its crown-jewel investments is quite the plot development.

📈 Buying While Everyone Else Is… Buying?

The timing makes Abel's moves particularly interesting. Berkshire shares have gained just 3% this year, trailing the S&P 500's roughly 13% advance, although the pricey shares have added about 9% over the past three months.

More importantly, Buffett's long period of selling had been interpreted by some investors as a warning about expensive US equities. Abel is now deploying billions while those same equities trade around record highs.

That hardly means Berkshire suddenly thinks deals are out there waiting to be had. A $365 billion cash balance still shows selectivity. But the company appears increasingly willing to distinguish between an expensive market and individual businesses that offer attractive long-term economics.

🏭 The Old Berkshire Keeps Printing Money

Abel also has the luxury of shopping from a position of strength. Berkshire's operating earnings climbed 16% to $12.98 billion in the second quarter, up from $11.16 billion a year earlier.

Strength across energy, railroads and manufacturing outweighed weaker insurance performance.

Operating earnings carry a lot of weight because they measure profits generated by Berkshire's actual businesses rather than quarterly swings in its enormous stock portfolio.

Those businesses keep throwing off cash, which gives Abel fresh capital to deploy even after Berkshire starts spending its existing cash pile.

🎓 The Buffett Lesson Still Works

There's a useful lesson here for individual investors, and it has little to do with copying Berkshire's next regulatory filing.

Buffett spent years waiting because prices rarely matched what he considered fair value. Berkshire now sees opportunities and is deploying capital while keeping hundreds of billions in reserve.

The strategy revolves around price, quality and patience, rather than whether the S&P 500 happens to be sitting at a record."It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."

Retail traders obviously don't have $365 billion parked in Treasury bills. The principle scales down nicely, though.

Cash gives you optionality. Patience gives you time. And when something you genuinely want finally appears at a price you can live with, having some buying power left feels considerably better than discovering you spent everything chasing yesterday's rally.

Off to you: What’s something you’re looking to snap up right now? Share your top picks in the comments!