Buffett's Cash Fortress: Record Reserves and Strategic Retreat from Apple
AInvestSaturday, Nov 2, 2024 11:00 pm ET
1min read
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Berkshire Hathaway's cash reserves soared to a historic high of $325.2 billion by the end of the third quarter. This increase in liquidity comes as Warren Buffett continues to limit major acquisitions and reduce significant stock holdings, most notably Apple Inc.

The Omaha-based conglomerate reported a notable decrease in its Apple shares, reducing its stake by roughly 25% from the previous quarter. By the end of September, Berkshire's Apple holdings were valued at $69.9 billion, dropping from $84.2 billion in June. Despite this reduction, Apple remains one of the largest positions in Berkshire's portfolio.

Berkshire Hathaway has been a net seller of stocks for eight consecutive quarters, with net stock sales totaling $36.1 billion in the third quarter. Buffett's aversion to hastily executing significant investments amid high market prices is evident, particularly as he seeks opportunities that promise low risk and substantial returns.

The company's decision to safeguard cash rather than repurchase its own shares, despite a 25% increase in its stock price this year, underscores Buffett's view on current valuations. This marks the first time since 2018 that Berkshire has not engaged in stock buybacks, further highlighting his cautious approach.

Operating earnings for the quarter declined by 6% year-over-year to $10.09 billion, mainly due to lower insurance underwriting profits and losses in currency translations. Specifically, the insurance sector faced financial setbacks owing to natural disaster-related claims, although divisions like GEICO showed stronger performance.

Buffett's current conservative stance contrasts starkly with his "buy American" sentiment during the 2008 financial downturn. His remarks at the annual shareholder meeting in May revealed concerns about potential hikes in capital gains tax, which could influence his investment decisions.

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