Warren Buffett’s Massive Cash Pile Reaches $325 Billion as Berkshire Hathaway Continues Apple Stock Sales
OMAHA, Neb. — Warren Buffett, chairman and CEO of Berkshire Hathaway, has increased his company’s cash reserves to an enormous $325 billion. This buildup comes after a year of consistent stock sales, especially focused on Apple and Bank of America shares. Despite Berkshire’s continued profitability, the company has not made any significant new investments or acquisitions in 2024. This cash pile raises questions among investors, as Berkshire sits on a substantial amount of liquidity in a market where acquisitions could potentially enhance its value.
On Saturday, Berkshire disclosed in its third-quarter report that it had sold an additional 100 million Apple shares. This move comes after the conglomerate had already halved its Apple holdings last quarter. Berkshire now holds about 300 million shares of Apple, valued at approximately $69.9 billion as of September. Apple remains Berkshire’s largest single investment, but the gradual reduction signals a shift from the $174.3 billion valuation recorded at the end of the previous year. This series of sales has led to widespread speculation about Buffett’s long-term outlook and investment strategy.
Some market analysts are left pondering Buffett’s motives. CFRA Research analyst Cathy Seifert noted that this large cash buildup might signal a more cautious economic outlook from Buffett and his team. “Are they more pessimistic about the future economic and market picture than perhaps others are?” Seifert questioned. Investors were also surprised to see that Berkshire had refrained from repurchasing its own shares during the quarter, which is an unusual move given Buffett’s preference for buybacks when he sees Berkshire’s shares as undervalued.
Buffett’s decision to start selling Apple shares can be partially traced back to his comments at Berkshire’s annual meeting in May. He suggested that he anticipated tax rates could increase in the near future, influencing his decision to start unloading some of Berkshire’s Apple holdings. Another potential factor could be the passing of Vice Chairman Charlie Munger last year. Edward Jones analyst Jim Shanahan speculated that Munger’s death might have influenced Buffett’s comfort level with holding such a large technology investment, as Munger had been a strong advocate for Apple and other tech companies. Shanahan added that Buffett might not be as comfortable with technology stocks as Munger was, saying, “If Charlie Munger were still alive, perhaps he wouldn’t have sold down the position quite as aggressively — maybe at all.”
For the third quarter, Berkshire reported a remarkable $26.25 billion in overall profit, equivalent to $18,272 per Class A share. This represents a significant improvement compared to a $12.77 billion loss recorded for the same period last year. However, Buffett has advised investors to focus on Berkshire’s operating earnings rather than net profit, as the latter fluctuates with the value of its investments. The company’s operating earnings showed a slight decrease of 6%, totaling $10.09 billion or $7,023.01 per Class A share. Although down from last year’s $10.8 billion, the earnings still demonstrated the resilience of Berkshire’s core businesses.
Berkshire’s revenue remained relatively steady at $92.995 billion, a slight decline from last year’s $93.21 billion. Analysts had forecasted lower revenue for this quarter, so the result exceeded expectations. However, it highlights a trend of stability rather than growth, indicating that Berkshire’s core businesses are maintaining profitability without any explosive expansion. Berkshire’s holdings span a wide range of sectors, from insurance (such as Geico) and railroads (BNSF) to retail and manufacturing, including popular brands like Dairy Queen and See’s Candy.
Another factor in the quarter’s results was the continued re-evaluation of policies by Berkshire’s insurance company, Guard, which led to some additional losses related to previous years. This adjustment reflects the complexity and ongoing challenges within Berkshire’s diverse insurance portfolio.
Additionally, Berkshire provided more information on its acquisition of the remaining shares in its utility division. This summer, Berkshire acquired these shares from the estate of former board member Walter Scott. The transaction was valued at approximately $4 billion, including $2.4 billion in cash, $600 million in debt, and over $1 billion in Class B shares for the Scott family. Notably, this purchase price differed from the price Berkshire Vice Chairman Greg Abel received two years ago when he sold his 1% stake for $870 million, suggesting a potential strategic advantage for Berkshire in the deal. Abel, who is expected to succeed Buffett as CEO, retains a significant position within the company’s leadership and is highly regarded for his experience and commitment.
For now, Buffett’s stock sales and cash accumulation strategy leave investors with more questions than answers. While Berkshire Hathaway’s financial strength and operational stability remain evident, the absence of any major acquisitions has led analysts and shareholders alike to question Buffett’s next move. At age 94, Buffett continues to shape Berkshire’s direction, but the growing cash reserves suggest he is waiting for an extraordinary opportunity or possibly signaling caution in an unpredictable economic landscape. The upcoming quarters may reveal more about Berkshire’s strategic direction as shareholders look for signs of whether the company will invest its substantial cash or continue building its reserves.
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