Business Corpus: Berkshire Hathaway's Cash Grows As Q2 Earnings Jump; Are Buybacks Next?Berkshire Hathaway reported a 67% surge in Q2 operating profit early Saturday, pushing its massive cash even higher. The post Berkshire Hathaway's Cash Grows As Q2 Earnings Jump; Are Buybacks Next? appeared first on Investor's Business Daily.

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Berkshire Hathaway (BRKB) reported a surge in second-quarter operating profit early Saturday, pushing its massive cash even higher and bolstering hopes that Warren Buffett will warm up to share repurchases.

The conglomerate has vast interests in insurance, railroads, utilities, financial services, publishing, retailing and manufacturing. Operating profit jumped 67% to $6.89 billion in Q2, led by gains in insurance underwriting.

It had a staggering $111.1 billion in cash and equivalents at the end of the quarter, up from $109 billion at the end of Q1. That expanding cash hoard has tested the patience of some shareholders who want to see the money put to use.

In July, Berkshire amended its share repurchase policy but said it will initiate stock buybacks only after releasing Q2 earnings. How soon any post-earnings buyback announcement may come is uncertain.

Class B shares rose 2.7% to 205.73 in Monday's stock market action, its best levels since late March. Berkshire stock is in a base with a potential 217.72 buy point.

Ahead of Saturday's earnings release, Morgan Stanley analyst Kai Pan said the recent amendment to Berkshire's share repurchase program "allows Berkshire to return part of the excess capital to shareholders while maintaining financial flexibility if attractive acquisition opportunities arise."

"We think solid 2Q results and ensuing stock buybacks should be positive catalysts for the stock," he wrote in July.

Under Berkshire's old policy, repurchase prices could not exceed 1.2 times book value per share, or assets minus liabilities. Now Warren Buffett can buy back Berkshire stock whenever he and partner Charles Munger think the repurchase price is below intrinsic value.

But James Shanahan, an analyst at Edward Jones, noted Berkshire shares are valued at almost 1.4 times book value and that Berkshire's buyback program has not been meaningful, historically.

"Practically speaking, I do not expect much by way of buybacks, even though the company current and projected cash balances suggest ample liquidity to support repurchase activity," he added.

Rising Apple (AAPL) and Wells Fargo (WFC) shares should boost its equity investment portfolio, Pan added.

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