Berkshire’s Abel puts capital to work: buybacks surge, 14-quarter stock-selling streak ends

Berkshire’s Capital Pivot: Buybacks Accelerate and the Cash Hoard Shrinks

Berkshire Hathaway has begun drawing down its record cash pile, signalling a decisive shift under new chief executive Greg Abel. In the second quarter the conglomerate bought back $4.5bn of its own shares and added a further $3.3bn in July, returning the pace of repurchases to the peak levels Warren Buffett set at the start of the decade. At the same time, Berkshire turned net buyer of equities for the first time in 14 quarters, snapping the longest selling streak in its modern history.

The quarter also saw a $10bn addition to an already sizeable stake in Google parent Alphabet, making it one of the group’s largest equity positions. Operating profit rose 16% to $12.98bn, beating analyst forecasts, while reported net income more than doubled to $25.67bn, driven by unrealised gains on the group’s listed equity portfolio. Revenue climbed 10% to $101.81bn, reversing several quarters of near-stagnation.

The moves mark the second quarter since Abel took the helm, with Buffett remaining as chairman. Abel, who consults Buffett on buyback decisions, appears to be following the long-standing rule that repurchases are permitted only when the share price falls below Berkshire’s “conservatively determined” intrinsic value. The company ended June with $364.7bn in cash, down from the record $380.2bn three months earlier.

How Abel is Reshaping the Buffett Empire — and Where Geico’s Struggles Sound an Alarm

Ending the selling spell: a deliberate capital redeployment

Berkshire’s swing from net seller to net buyer of equities — purchasing almost $20bn more in stocks than it sold — is the clearest sign yet that Abel is comfortable deploying capital at scale. The previous 14-quarter selling streak had become a market narrative in itself, raising doubts about whether Berkshire could ever find enough attractive targets. The addition to Alphabet and the exit from net-selling status suggests Abel sees valuation opportunities that Buffett’s late-term caution had bypassed.

The sharp acceleration in buybacks, running at an annualised pace not seen since 2021, reinforces the message. With Berkshire’s market capitalisation trading near 1.5 times book value — below levels that previously triggered large repurchases — Abel is signalling that he considers the stock meaningfully undervalued. Gabelli Funds’ Macrae Sykes called the buybacks “a confidence-builder in the current value and future growth of intrinsic value.”

Geico’s underwriting wobble overshadows the insurance result

Beneath the headline beat, auto insurer Geico delivered what CFRA analyst Cathy Seifert described as “absolutely dramatic” and “red flag” numbers. Pre-tax underwriting profit tumbled 45%, hit by higher claims frequency and a surge in advertising spending aimed at regaining market share lost during a multi-year restructuring. While competitors Allstate and Progressive are showing stronger underwriting discipline, Geico appears to be paying the price for having been slow to reprice risk.

The question Seifert raises — “Was Geico too late in raising rates and is it now bearing the brunt of persistently higher claims?” — will dominate investor attention in coming quarters. The heavy ad spend, meanwhile, is eroding profitability. With total insurance and reinsurance profit down 11%, the drag from Geico was partly offset by lower-than-expected property losses and gains in other insurance lines, but the core auto book remains a vulnerability.

Abel’s quiet imprint on the conglomerate

Abel is not yet stepping out from Buffett’s shadow — Buffett told CNBC this month that neither man acts without the other’s approval — but the shift in capital management is unmistakable. The ability to simultaneously restart buybacks, end the prolonged equity-selling phase and oversee an operating-profit beat gives early credibility to the transition. The businesses outside Geico performed solidly: BNSF Railway increased profit 6% on higher volumes and fuel surcharges, while Berkshire Hathaway Energy reported a 27% profit gain thanks to wider utility margins and tax benefits.

Berkshire’s stock, however, has lagged the S&P 500 by 40 percentage points since Buffett announced his retirement as CEO in May 2025, and is up just 3% this year against a 13% index gain. A sustained buyback program and fresh equity bets could narrow that gap — provided Geico’s problems are contained.

What Berkshire’s Shifting Strategy Means for Investors and Rivals

The quarter’s events provide several concrete signals for investors, analysts and sector competitors:

• For Berkshire shareholders: The re-acceleration of buybacks at peak-era levels is a direct valuation signal. With the board authorising repurchases only when the share price is below conservatively estimated intrinsic value, the current pace implies that Abel and Buffett see material undervaluation. The 1.5x book value threshold is likely to remain a key yardstick.
• For insurance rivals: Geico’s 45% pre-tax profit drop, driven by claims frequency and heavy marketing spend, suggests the company is struggling to earn its cost of capital in the current auto underwriting cycle. This opens a window for Progressive and Allstate to further widen their performance gap, particularly if Geico is forced to cut ad spending or raise rates more aggressively.
• For equity investors tracking Berkshire’s portfolio moves: The $10bn addition to Alphabet makes the tech giant one of Berkshire’s top holdings and signals that Abel is comfortable increasing exposure to a sector Buffett historically avoided. The end of fourteen consecutive quarters as a net seller of equities suggests the new leadership may be more opportunistic in buying during market dislocations.
• For macro watchers: Berkshire’s explicit warning about “considerable uncertainty” from trade tariffs and wars, coupled with weakening consumer-facing businesses (car dealers, Fruit of the Loom, Forest River), provides a real-time read on consumer confidence from one of the US’s most diversified industrial and retail operators. Watch for further softness in the consumer discretionary units when the company next reports.