Berkshire Hathaway reported second-quarter results, benefiting from a rapid rise in overall US stocks in the second quarter, with a net profit of $26.3 billion, up from $14.1 billion in the same period last year.

As of 20:34 on Aug. 10, 2020, Berkshire Hathaway B shares were also up 0.32% before trading.

However, Berkshire Hathaway's cash reserves are at an all-time high of $146.6 billion, not only that, but the question of what shares Berkshire currently holds and its successors are also worthy of market attention.

However, Berkshire Hathaway's investment is similar to Tabler's idea of "anti-fragility", that is, "to make the overall portfolio more robust by combining investments in uncertainty and to obtain relatively certain investments in an uncertain investment world." how exactly did Berkshire do it?

I. where do profits come from?

As a huge investment group, Berkshire not only involves the income of stock investment, but also contains a large number of industrial investment and financial holding enterprises, the income of these companies constitute the operating income of the current period, and the income of controlling enterprises and the income of stock investment can compensate each other, that is, the profit dividend of controlling enterprises can be used to buy stocks when the stock market is in the doldrums, and when the stock secondary market valuation is high. You can cash in some high-yielding stocks and then buy some excellent enterprises.

As a result, Berkshire's investment is not confined to a particular market, but focuses on assets, constantly looking for new assets with a more appropriate risk-return ratio, and choosing the opportunity to adjust, as can be seen in Berkshire's income statement.

Among them, "Operating earnings" stands for "operating income", which fell to $5.5 billion in the second quarter from $6.1 billion in the same period last year. Operating income represents Berkshire's income from industrial investment, which, were it not for the impact of the epidemic, led to a decline in railways, utilities and energy businesses. Affected by COVID-19 's epidemic, Berkshire took a $9.8 billion writedown in the quarter to Precision parts, a maker of aircraft parts and energy production equipment it bought for about $32 billion in 2016.

The entity will provide a steady stream of cash support for the group. not only that, the profits of the huge insurance business, especially the underwriting business, have increased, and the insurance business as a whole is in a relatively good development trend. The great development of the insurance business will obtain a large amount of liquidity for Berkshire Hathaway Group, so that Cheng Rong can invest freely when the market fluctuates violently.

In the foreseeable future, with reference to the previous pandemic of Spanish influenza, smallpox, measles and other viruses, the economy will be affected in stages. If the epidemic can be gradually brought under control, Berkshire's physical investment will gradually return to normal income levels.

The surge in Berkshire's second-quarter results was mainly due to investment and derivatives returns, which were $31.017 billion and $628 million in the second quarter of 2020, compared with $7.766 billion and $168 million in the same period a year ago. this is inextricably linked to the rapid rebound in the index over the same period.

Not only that, Berkshire Hathaway's cash reserves soared to a record $146.6 billion at the end of June, and its trading activity is picking up, with a preliminary agreement to buy Dominion Energy's natural gas transmission and storage assets for $10 billion in July, which is also in line with Buffett's overall thinking and ability to "deploy funds flexibly and wait for the batting area."

2. What are the attractions of stock investment

According to the data disclosed by whalewisdom, as of May 15, 2020, Berkshire Hathaway Group made fewer adjustments to heavy stocks in the second quarter, reducing only some of its shares in JPMorgan Chase & Co, while buying some shares of U.S. Bancorp, of which Apple Inc contributed huge profits, while Kraft Heinz, which fell sharply in the previous period, also ushered in a share price rise in the second quarter.

Not only that, Berkshire made a record $5.1 billion share buyback in the second quarter, so the stock god's company has a variety of means of capital operation, and the media is not deliberately simplified to "buy and then stay still." is to be able to adapt measures to local conditions and make appropriate investments according to the actual situation.

The former Buffett said he would not invest in technology stocks and gave reasons:

• First, the relatively limited life span of science and technology enterprises and the defensibility of competitive advantage

• Second: the difficulty of identifying a small number of winners in advance and buying shares in these companies at a reasonable price.

At present, Berkshire Hathaway's investment is not limited to traditional industries, if the great development of mobile phones has changed it from traditional communication equipment to indispensable electronic products for human beings, with scientific and technological attributes. However, according to the data as of May 15, 2020, Berkshire Hathaway Group's investment portfolio is not completely without technology media and other attributes. For example, in the companies whose investment portfolio accounts for more than 1%, Chartered Communications (CHTR) accounts for 1.39% of Berkshire's investment portfolio, and VRSN (Verizon) Listed companies with a variety of network basic services) account for 1.35% of Berkshire's portfolio, from which it can be seen that good investors are not limited to a particular investment category.

According to Berkshire Hathaway's current portfolio, although the group's current portfolio is jointly managed by a number of investment managers, it can still be seen that the portfolio has a strong Buffett color. It also shows that really good investors are constantly learning and evolving, rather than clinging to the rules of the past and investing only in their own circle of capabilities.

On the whole, the future performance of Berkshire Hathaway Group will still depend on: stock market investment ability + asset operation ability. The current second-quarter results reflect the group's advantages in covering a wide range of infrastructure investments, making Berkshire Hathaway itself relatively vulnerable to the epidemic, which is highly similar to Tabler's "anti-vulnerability theory":

"everything in investment, large and small, is full of uncertainty and fragility, and the risk of this vulnerability is the main reason why we can't control the investment. Vulnerabilities cannot be eliminated, but we can always see something that benefits from shocks and becomes stronger in volatility. "