Berkshire Hathaway Inc. has reached a staggering cash reserve of $325.2 billion in the third quarter of the year, marking an unprecedented milestone for the multinational conglomerate. This remarkable growth comes as chairman Warren Buffett strategically reduced some of his most substantial equity positions while avoiding significant acquisitions. The Omaha-based conglomerate revealed on November 2, Saturday, that it has once again decreased its holdings in the technology giant Apple Inc., led by CEO Tim Cook.
As of the close of the quarter, Berkshire’s investment in Apple was valued at $69.9 billion, a notable decline from $84.2 billion in the previous quarter. This reduction signifies a substantial 25 percent cut in its stake. Berkshire Hathaway initially disclosed its investment in Apple back in 2016, committing $31.1 billion to acquire 908 million shares that it held at the end of 2021. Notably, Berkshire sold more than 600 million Apple shares in 2024, although Apple continues to be the conglomerate’s largest single stock holding.
During the third quarter, Berkshire Hathaway divested a significant $36.1 billion in stocks cumulatively, which included several billion dollars’ worth of shares in Bank of America (BofA). Contrarily, the conglomerate made only a modest $1.5 billion in purchases, making this the eighth consecutive quarter in which Berkshire operated as a net seller of stocks. In an additional sign of caution, Buffett refrained from repurchasing any of Berkshire’s own shares, marking the first time since Q2 of 2018 that this has occurred. This decision suggests that Buffett currently does not perceive shares of his $975 billion conglomerate as an appealing bargain.
Despite selling off some Apple shares, Buffett expressed in May that Apple represents an “even better” investment compared to two other noteworthy Berkshire holdings: American Express Co. and Coca-Cola Co. He affirmed that Apple would likely maintain its status as the conglomerate’s top holding, implying that tax implications played a role in the decision to sell part of the share. “I don’t mind at all, under current conditions, building the cash position,” Buffett stated, highlighting the company’s focus on strategic financial management. In the third quarter, Berkshire reported net share sales amounting to $34.6 billion.
Warren Buffett has acknowledged the difficulty of deploying this massive cash reserve, citing elevated market prices that make identifying attractive deals a challenge. During the annual shareholder meeting held in May 2024, Buffett remarked that Berkshire is not in a hurry to spend its cash reserves “unless we think we’re doing something that has very little risk and can make us a lot of money.” The current market capitalization of Berkshire stands at $974.3 billion, having briefly surpassed the $1 trillion mark for the first time on August 28.
Berkshire Hathaway Key Financials
Berkshire’s operating earnings have dipped by six percent compared to a year earlier, totaling $10.09 billion primarily due to insurance underwriting losses attributed to Hurricane Helene, alongside currency losses resulting from the strengthening US dollar. Buffett has previously emphasized that operating results provide a clearer picture of Berkshire’s performance.
Earnings from the conglomerate’s umbrella of insurance operations plummeted by 69 percent, resulting in a mere $750 million compared to $2.4 billion the previous year, with significant higher losses occurring at Berkshire Hathaway Primary Group. Meanwhile, net income reached $26.25 billion, buoyed by unrealized gains from Berkshire’s stock investments, particularly in Apple. Buffett highlighted in May that, despite the sales, Apple is poised to remain Berkshire’s most substantial stock investment, reasoning that selling was prudent given the potential increase in the 21 percent federal tax rate on gains. Further complicating matters, Berkshire forecasts pre-tax losses ranging from $1.3 billion to $1.5 billion in the fourth quarter as a result of damages from Hurricane Milton, which struck Florida in October.
At 94 years old, Buffett has been at the helm of Berkshire since 1965 and is anticipated to transition leadership to Vice Chairman Greg Abel, aged 62, in the future. Berkshire’s extensive portfolio encompasses a wide array of businesses, including Berkshire Hathaway Energy, as well as numerous manufacturing and industrial firms, a leading real estate brokerage, and popular retail chains such as Dairy Queen and Fruit of the Loom. Moreover, Berkshire’s Class A shares have surged by 25 percent this year, significantly outperforming the Standard & Poor’s 500, which has demonstrated a 20 percent increase.
With inputs from Bloomberg and Reuters
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**Interview with Financial Analyst Jane Doe on Berkshire Hathaway’s Recent Cash Reserves and Investment Strategies**
**Interviewer:** Welcome, Jane. Thank you for joining us today. Berkshire Hathaway recently reported a cash reserve of $325.2 billion for the third quarter. What are your thoughts on this remarkable milestone?
**Jane Doe:** Thank you for having me. It’s indeed a significant achievement for Berkshire Hathaway. This cash pile not only reflects their financial strength but also underscores Warren Buffett’s cautious approach to the current market environment. It seems they are positioning themselves to capitalize on opportunities, but only when the circumstances are right.
**Interviewer:** You mentioned caution. Berkshire has reduced its stake in Apple by 25% and divested $36.1 billion in stocks this quarter. What does this say about Buffett’s strategy?
**Jane Doe:** Buffett’s decision to cut back on Apple, despite it being their largest holding, suggests a strategic reevaluation. While Apple remains a great company, Buffett might be concerned about near-term challenges or valuations. His history of selling at the right time indicates he’s not just a long-term holder blindly; he assesses market conditions and company performance actively.
**Interviewer:** It’s interesting to note that Berkshire has operated as a net seller for eight consecutive quarters. Do you believe this trend will continue?
**Jane Doe:** Given the prevailing market conditions, I do think it could persist. Buffett has commented on the difficulty of finding attractive investments at reasonable prices. Until valuations come down or he identifies opportunities with low risk and high potential returns, we might see more selling rather than buying.
**Interviewer:** Buffett hasn’t repurchased any of Berkshire’s shares this quarter for the first time since 2018. What does this signal to you about his view on the company’s stock?
**Jane Doe:** That’s a key observation. Buffett’s reluctance to repurchase shares could mean he doesn’t see them as a bargain at current prices. It reflects a more measured and analytical approach, suggesting he believes investors should not rush into decisions, even when one’s own stock is on the table.
**Interviewer:** Despite these reductions, Buffett has referred to Apple as an “even better” investment compared to some other holdings. How should investors interpret this tension between selling and confidence in a stock?
**Jane Doe:** This highlights Buffett’s multifaceted approach. He respects the fundamentals and growth potential of Apple but balances this with tactical decision-making regarding portfolio composition. It’s about maximizing value rather than simply holding for the sake of holding. Investors should take cues from this—being long-term doesn’t mean ignoring immediate market dynamics.
**Interviewer:** Lastly, with Berkshire’s market cap briefly surpassing $1 trillion, how does this cash strategy position them for future growth, especially in a fluctuating market?
**Jane Doe:** The cash reserves place Berkshire in a unique position. Should opportunities arise in an uncertain market, they have the liquidity to act swiftly, potentially acquiring undervalued assets or companies. This approach allows them to not just weather storms but to thrive when others are cautious. Strategic cash management can turn into a competitive advantage during downturns.
**Interviewer:** Thank you for your insights, Jane. It’s clear that Berkshire Hathaway is navigating a complex financial landscape with a strategic mindset.
**Jane Doe:** Absolutely. Thank you for having me.
