Warren Buffett is currently holding over $325 billion in cash as Berkshire Hathaway continues reducing its significant stakes in Apple and Bank of America while reaping steady profits from its diverse portfolio of businesses without pursuing major acquisitions.
In its third-quarter report, Berkshire disclosed it sold approximately 100 million more Apple shares, following a prior reduction where it halved its substantial holding in the tech giant. Despite these sales, Berkshire's remaining 300 million shares of Apple, valued at $69.9 billion at the end of September, still represent its largest investment, though markedly reduced from the $174.3 billion valuation at the end of last year.
Investors were also surprised to find Berkshire did not repurchase any of its own stock during the quarter. Cathy Seifert, an analyst at CFRA Research, noted that this growing cash reserve raises questions among shareholders about Buffett's outlook on the economy. "Are they more pessimistic about the future economic and market picture than perhaps others are?" Seifert remarked.
At Berkshire’s annual meeting in May, Buffett indicated that rising tax rate expectations contributed to his decision to trim the Apple stake. However, Edward Jones analyst Jim Shanahan suggested another possible factor: the passing of Vice Chairman Charlie Munger last year, noting that the timing of the sales aligns with Munger’s death. “If Charlie Munger were still alive, perhaps he wouldn’t have sold down the position quite as aggressively — maybe at all,” Shanahan observed, highlighting Buffett’s more cautious approach to tech investments compared to his late partner.
Berkshire's third-quarter profit surged to $26.25 billion, or $18,272 per Class A share, driven by investment gains, contrasting with the previous year’s $12.77 billion loss. Buffett has long advised that operating earnings, which exclude investment fluctuations, offer a clearer picture of the company's core performance. By this metric, operating earnings fell about 6% to $10.09 billion, or $7,023.01 per Class A share, down from $10.8 billion last year. Analysts had projected $7,335.11 per Class A share.
Revenue remained steady at $92.995 billion, compared to last year’s $93.21 billion, surpassing analysts’ expectations of $92.231 billion.
Berkshire’s diverse holdings include insurance operations like Geico, the BNSF railroad, major utility companies, and various retail and manufacturing enterprises such as Dairy Queen and See’s Candy. One of its insurers, Guard, reported some additional losses from previous years after reevaluating its policies.
In addition, Berkshire revealed it paid approximately $4 billion to acquire the remaining stake in its utility business from the estate of former board member Walter Scott, involving $2.4 billion in cash, $600 million in debt, and over $1 billion in Class B Berkshire shares.
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