- Cash pile hits $325 billion
- Apple stake reduced to $70 billion
- Share buybacks halted
Investment conglomerate Berkshire Hathaway (BRK-N:NYSE) revealed it has added to its mountain of cash and further sold down its Apple (APPL:NASDAQ) stake in the third quarter.
Traditionally the Omaha, Nebraska-based company, headed by legendary investor Warren Buffett, releases results on a Saturday to give investors time to reflect and analyse performance during a time when markets are closed.
Berkshire slashed its Apple holding by a quarter or 100 million shares, marking the fourth consecutive quarter of Apple sales, reducing its stake to around $70 billion.
The sale was part of a wider selling spree which saw Berkshire reduce its stock holdings by $36 billion adding to its cash hoard which stood at $325.2 billion at the end of September, up from $276.9 billion the prior quarter. Berkshire has been a net seller of stocks for the last eight quarters.
BUYBACKS HALTED
Following a steady reduction in the amount of share buybacks during the year Buffett halted buybacks completely during the quarter which may signal the 94-year-old believes Berkshire’s shares no longer trade below his estimate of intrinsic value.
Berkshire shares have advanced 23% in 2024, outpacing the benchmark S&P 500 index, as the market value of the conglomerate breached one trillion dollars for the first time.
Alternatively, the nonagenarian may be raising cash to make a big acquisition. Berkshire’s last acquisition of an entire company was in 2017. Even more intriguingly, the increasing cash pile could mean Buffett sees little value in stocks.
Investment director Russ Mould at AJ Bell commented: ‘When the world’s most famous living investor continues to sell down shares and sit on a considerable cash pile, it tells you something very important about the state of the market.
‘It implies Warren Buffett can’t find anything worth buying at the current price, probably because valuations look a bit rich in many parts of the market; or he’s building up a war chest so he can go bargain-hunting in the case of a market correction.
Berkshire booked a 6% decline in quarterly operating profit to $10.09 billion, slightly below consensus estimates as insurance underwriting losses and claims related to hurricane Helene offset improved profitability at car insurer Geico.
Disclaimer: Financial services company AJ Bell referenced in the article owns Shares magazine. The author (Martin Gamble) and the editor (Tom Sieber) own shares in AJ Bell.
