At the Berkshire Hathaway annual meeting on May 4, 2024, in Omaha, Nebraska, Tina Schmidt, a shareholder from Cozad, Nebraska, attended wearing a shirt featuring a portrait of Warren Buffett styled after Andy Warhol’s iconic art. (AP Photo/Rebecca S. Gratz, File)
Warren Buffett’s Berkshire Hathaway has amassed over $325 billion in cash following a year of significant stock sales, including Apple and Bank of America shares. With no major acquisitions in sight, Berkshire’s cash reserves keep growing, supported by consistent profits from its diverse businesses, ranging from insurance and railroads to retail brands like Dairy Queen.
In the third quarter, Berkshire sold another 100 million Apple shares, reducing its once-dominant Apple stake to about 300 million shares, now worth approximately $69.9 billion. This stake, which had been valued at $174.3 billion at the end of the previous year, remains Berkshire’s largest investment despite the significant reduction. Additionally, the firm did not repurchase any of its own stock this quarter, sparking questions among investors.
Analysts and investors are puzzled by Buffett’s cautious approach. CFRA analyst Cathy Seifert suggested that the company’s cash buildup could reflect a cautious outlook on future economic conditions. At Berkshire’s annual meeting, Buffett had noted his concern that tax rates might increase, potentially influencing his decision to trim Apple shares.
Edward Jones analyst Jim Shanahan speculates that Vice Chairman Charlie Munger’s recent passing may have impacted these sales. Munger, a long-time advocate of technology investments, might have held a different view. Shanahan noted, “If Charlie were alive, perhaps the Apple shares wouldn’t have been sold down so quickly.”
Berkshire’s third-quarter profits soared to $26.25 billion, a turnaround from the $12.77 billion loss the company recorded in the same quarter last year, largely due to market-driven gains in investments. However, Buffett cautions that Berkshire’s core operating earnings, which exclude investment fluctuations, provide a clearer picture of the company's performance. This quarter, Berkshire’s operating earnings dropped 6% to $10.09 billion, slightly below last year’s $10.8 billion.
Berkshire’s total revenue remained steady at $93 billion, slightly surpassing analysts' forecasts. Despite little change in revenue, Berkshire’s businesses—such as insurance provider Geico, BNSF railroad, and various utilities—continue to contribute to its earnings.
One unusual expense this quarter came from Berkshire’s insurance arm, Guard, which adjusted its loss reserves after reassessing past policies, reflecting higher anticipated claims than previously expected.
Meanwhile, Berkshire closed a major acquisition by buying out the remaining shares in its utility business from the estate of former board member Walter Scott. The company paid around $4 billion in total, including cash, debt, and Class B Berkshire shares, though the terms were less favorable for Scott's estate compared to prior transactions with other executives, including Berkshire’s incoming CEO Greg Abel, who had sold his own 1% stake in the utilities two years ago for $870 million.
With Buffett now 94, succession plans are in place, positioning Abel to lead Berkshire Hathaway when Buffett steps down or passes away. Until then, Buffett’s cautious strategy continues to shape Berkshire’s moves, leaving investors speculating on the motivations behind the conservative cash buildup and steady unloading of stocks.
