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Buffett buys back $5.1B in Berkshire stock

Yahoo Finance’s Ines Ferré joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss Warren Buffett's latest record investment in Berkshire Hathaway.

Video Transcript

BRIAN SOZZI: Let's get back to Ines Ferre with the Yahoo Finance and ticker. Ines, Berkshire Hathaway in focus.

INES FERRE: In focus, that's right. The company spending a record $5.1 billion, buying back its own stock in the second quarter in May and in June. Now, in early May, Warren Buffett had said that he was holding onto cash to kind of see the direction of where the pandemic was going. But when looking for undervalued assets, Warren Buffett went to his own Berkshire Hathaway shares.

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So analysts are-- over at Edward Jones also are estimating that Berkshire bought $2.4 billion worth of stock in July. Some other key takeaways from Berkshire Hathaway's recent quarterly results, it sold almost $13 billion in stock, including airline stocks. We knew this because in May, during the company's shareholder meeting, Warren Buffett had said that the company had sold its-- all its stake in major airlines.

And also its operating profit dropped 10%. That still, though, came in better than what analysts had been expecting. Berkshire Hathaway did take a charge of $10 billion tied to its Precision Castparts business. That's the aerospace business. And the low stakes in Apple have done well and Amazon have done well and JP Morgan had done well. And we know also that Berkshire Hathaway recently increased its stake in Bank of America and the energy sector as well, and with plenty of cash of course still on hand, $146 billion in cash. Brian.

BRIAN SOZZI: Alexis, everybody on the street is looking for Warren Buffett making his next big acquisition. He kind of is. He's buying back Berkshire.

INES FERRE: That's certainly true. I mean-- I'll take it, Brian. You know, the fact that-- that back in May, Warren Buffett, during the shareholder meeting, was basically saying he's holding on to cash, not really buying back shares yet. And the fact that now he is buying back-- this is a record, $5.1 billion, buying back his own shares of Berkshire Hathaway. I mean, that's pretty impressive.

BRIAN SOZZI: It is But we are-- more broadly, we've seen valuations come down. I look at a Marriott, there's a well-known name. Why isn't Warren Buffett picking the name on that? Outlook earnings this morning, occupancy has fallen off the cliff. But everybody owns Marriott. I'm sure he understands Marriott too.

INES FERRE: I'm sure so. But remember what he did with the airlines. He basically said that airline demand, that it would be very unclear what would happen after the pandemic, if the business would come back to full capacity, when it would come back. So-- business travelers are not traveling. So I think it may-- he may be extending that-- we're not in his mind, but he may be extending that to the hotels as well. I mean, it all kind of goes in the same package-- airlines, hotels, business travel.

BRIAN SOZZI: Hey, oh, way to question Warren Buffett. All right, thanks so much.

[CHUCKLES]