Warren Buffett is betting on brighter prospects for his Berkshire Hathaway Inc.

Berkshire spent a record $5.1 billion buying back its own stock in the second quarter, and may have kept that higher pace going in July. The billionaire investor sought to seize on a bigger discount to the S&P 500 during a quarter when the conglomerate’s operating businesses held up better than expected.

Buffett said in early May that he was keeping cash high to be prepared for any direction the pandemic might turn and wasn’t overly attracted to buybacks. But as he searched for undervalued assets to spend billions on, he gravitated to his own firm’s shares.

“Even though we don’t know how long it’s going to be and how much it’s going to permanently affect people’s behavior, we think Berkshire Hathaway is in a really good position to survive,” said Bill Smead, chief investment officer at Smead Capital Management, which oversees $1.5 billion including Berkshire shares.

Edward Jones analyst Jim Shanahan estimated that Berkshire repurchased about $2.4 billion more of its stock in July.

The 10% drop in operating profit wasn’t nearly as precipitous as the 27% decline expected by analysts at Keefe, Bruyette & Woods, and results were better than a forecast from Shanahan. Earnings generated by Berkshire’s businesses topped $5 billion for the ninth time in the last 10 quarters.

Buffett piled into his firm’s stock as Class A shares fell 1.7% and Class B shares were down 2.4% in the second quarter. He wasn’t as bullish on broader equities as the S&P 500 rallied 20%. Berkshire had its biggest net sales of stocks in more than a decade.

Berkshire’s Class A shares rose 0.7% at 9:34 a.m. in New York. Its Class B shares were up 0.6%.

Along with the buybacks, purchases of Bank of America Corp. stock in recent weeks as well as a July deal for natural-gas assets signal that Buffett isn’t just waiting on the sidelines anymore. He’s picking his spots: Bank of America is a longtime Berkshire investment and Buffett’s firm is very active in the energy sector.

“All of those are really things he’s comfortable with,” said Paul Lountzis, who oversees investments including Berkshire shares as president of Lountzis Asset Management. “I don’t think he’s stepping out of his comfort zone. He’s still trying to be very careful and very conservative.”

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