Thread by @ChrisBloomstran

Quick observations on Berkshire's 10-Q:
Cash: Because everyone mentions it, $144B is up from $138B at yearend. For perspective, cash totals 15.78% of $912.5B in total firm assets, down from 15.89% at yearend. Firm assets grew $39B from yearend. Book value up $27.2B to $470.4B. 1/

There is no liability for T-bills purchased so the media and other watchers will correctly report the cash balance. Much lamentation will occur about the "huge" cash pile and the inability to spend it. It's not much above the 12% average cash to assets relationship since 1997. 2/

On spending cash, share repos of $6B in the quarter, following $6.5B in Q1 and $24.7B for all of 2020. Another 4,181 "A" share equivalents have been bought since 6/30 to 7/26. At ~$427k/share, that's an additional $1.8B. The cadence of repos roughly matches operating profit. 3/

Monthly repos at $1.8B, $0.8B and $3.4B for the three months to June 30. 14,426 A share equivalents were bought at an average $417,816 per share, which is $278.54 per B share. On 1.533m average A's out on avg BVPS of $302,455, the average price paid to book value was 138%. 4/

Interestingly, BRK stated they would not repurchase shares if the cash balance dropped below $30B. This had been $20B since at least 2011. At the annual meeting, Mr. Buffett acknowledged that Berkshire will generally have on the order of $70B in cash on hand, matching my work. 5/

Growth capex continues to be a terrific use of capital. BNSF and BHE spent a combined $4.1B YTD and look to spend an additional $6.2B in the 2nd half. Capex at these operations widely outpaces depreciation expense. BHE in particular has a very long runway to spend large sums. 6/

Debt outstanding modestly reduced. New LT debt raised: Holding company sold 600m 30-year euro debt at 0.5% and $1.5B of 5 to 20-year yen denominated debt. BNSF raised $925m 30-year at 3.3%. BHE raised $550m 30-year at 3.4%. Amazing. Berkshire is lengthening at VERY LOW yields. 7/

Equity portfolio: BRK sold $1B and bought $2.1B in the quarter, for a net purchase of $1.13B. Sizable sales occurred among commercial and industrial holdings. I'd guess more $GM, $CHV and the drugs were trimmed. Look to be small buys in financials, so adds to $AON and $MMC? 8/

The stock portfolio, mostly owned by the insurers, returned ~9.6% in 2Q and ~12.7% for the first 6 months. As of Friday the stocks are up ~16.5%. Apple, 43% of the portfolio, was only up 3.6% at midyear but is now up 10.6%. Stocks are $308B at 6/30, up from $281B at 12/31. 9/

Insurance: Underwriting profit a little below what I'd call normal in 2Q and close to normal YTD. Positive reserve development. Ex normal (accounting) losses in retroactive and periodic payment annuity insurance overall in great shape. Float at $142B, up from $138B at 12/31. 10/

Pandemic rebates continued into early 2Q, have finally run their course at GEICO. Losses back to more normal level, even too high. Nobody took price during the pandemic. Frequencies way up. More Teslas on the road, crashing w/ FSD or operated by testosterone-charged lunatics? 11/

GEICO underwriting 93.4%. Premiums up reflecting fewer rebates but also up 4.9% in price. Expenses firmly under control. Advertising up. As frequencies and severities rise, look for GEICO and the industry to get price late 2021 into 2022. Good recent headway vs $PGR recently. 12/

Primary continues to grow rapidly, particularly Specialty. Premiums earned will >$11B for the year. Workmans' comp brutal pricing, seeing this across the industry. Huge volume increases in med mal. The TX storm Uri was expensive. $156m at Primary and $418m at P/C reinsurance. 13/

Covid losses of $180 at Primary and $575m in P/C reinsurance. Still developing, but BRK is in WAY better shape vs industry. Less exposure, better policy language, way more capital and less capital at risk. Higher mortality causing sizable losses in reinsurance life/health. 14/

Insurance (and throughout) interest income WAY down, naturally with short Treasury yields near zero. Thanks, Jay. I bake in no expectation of ever earning any real or nominal yield on cash. Impacts the optionality premium of assumed returns on deploying cash over time. 15/

The rail is chugging. Recovered much of depressed volumes and profitability. Still not back to normal steady state. More improvement to come. You can see the variable cost nature of the business. On revenues up 26% y/y, fuel expense more than doubled and compensation up 17%. 16/

Huge recovery in shipping consumer and industrial. Even coal revenues up 42% on 32% rise in cars/units. Utilities seeing higher demand and also building inventories. This will run its course and coal shipments will head back down over time. 17/

Energy continues to kill it. Profit recovered and up 22%. Retail/wholesale volumes up. Tax rate continues negative, supporting growth in wind, solar and grid. Final portion of assets bought from Dominion $D will not close as previously announced. Current DOJ tough on deals. 18/

Looks like all of MSR & Finance nearly fully recovered, except Precision, whose customers have adequate inventory & activity nowhere near 2019 levels. Way below. Lots of discussion at MSR about cost increases/supply chain problems. Seeing this in almost every release I read. 19/

Housing businesses on fire (huge growth and profit in the residential brokerage business inside BHE as well - largest brokerage in the country). Industrial strong - Lubrizol, Marmon and IMC up high 20s to mid-40s. Profits up more on operating leverage and cost control. 20/

If Clayton keeps growing as it has been, it will grow to be larger than BRK itself! Kidding, but sailed through Covid, growing sales > 30%, profit > 40%, Clayton is getting very large. Sales will top $10B in '21. Pretax profit pushing $2B. Now the largest sub in MSR by far. 21/

Forest River - Huge RV demand. Balance of consumer products and service businesses all recovering. Retail closed for much of 2Q last year making y/y comps worthless. Against '19 lots of recovery & even higher sales and profits. BHA (auto dealer) 30% increase in vehicle sales. 22/

Even McLane improved, w/ pretax profit 0.7%. Won't be healthy until pretax recovers to ~1%. Lots of credit losses last year when restaurants closed or limited to takeout/outside dining. Still operating below capacity. Worker "shortage" due to free money and video games. 23/

In total a pretty mundane Q. No elephants but between repos and growth capex, coupled with lengthening debt at low rates, capital allocation is excellent. Despite the stock up 23.7% YTD with book value "only" up 6.1%, BVPS is up 8.4% and intrinsic value/share advances nicely. 24/

Berkshire is doing what it should be doing with capital and profit. Most subs harmed last year are fully recovered or well on the way. Cost & supply chain pressures exist, but BRK is well situated to manage these. That more don't emulate the behavior of the place is an advantage.