With his retirement imminent, Buffett has accumulated $382 billion in cash, setting a new all-time high!
Warren Buffett has reduced his stock holdings for the third consecutive year, with Berkshire Hathaway's cash reserves soaring to 382 billions USD. As the "Oracle of Omaha" takes these actions before stepping down, is he defending against risks or preparing for the next round of low-price investments?
Buffett has sold stocks for the third consecutive year, as the CEO of Berkshire Hathaway (BRK.A.N, BRK.B.N) enters the final stage of his tenure at the vast conglomerate—a business empire he has personally built and managed for over sixty years.
Berkshire Hathaway disclosed on Saturday local time that the company once again sold $6.1 billion worth of common stocks in the three months ending September 30. With stock prices in multiple sectors rising sharply, Buffett seems to have found more opportunities to sell than to buy. Over the past three years, Berkshire has cumulatively sold about $184 billion worth of stocks.
The group’s cash reserves continue to climb, reaching a record $382 billion, with these funds coming from its diversified businesses covering insurance, manufacturing, utilities, and one of North America’s largest railroads. However, this figure does not yet include the payable fees for short-term U.S. Treasury investments, which Berkshire noted amounted to about $23 billion this quarter.
Berkshire has not conducted any stock buybacks for five consecutive quarters, with Buffett choosing to remain on the sidelines.
Since 95-year-old Buffett announced he would step down as CEO at the end of this year, the company’s stock performance has lagged behind the S&P 500 index. In January next year, 62-year-old Canadian executive Greg Abel, who previously oversaw Berkshire’s non-insurance businesses, will take over as CEO.
Since Buffett announced his upcoming retirement at the annual shareholder meeting in Omaha in May, investors have been closely watching the succession process. During this period, Berkshire’s high-voting Class A shares have fallen by about 12%, while the S&P 500 index has risen by about 20%.
After years without major acquisitions, Berkshire finally closed a big deal last month, agreeing to acquire Occidental Petroleum’s chemical business for $9.7 billion in an all-cash transaction. This is the first major deal led by Abel.
However, some investors remain optimistic. “Greg is very well-suited to take the baton from Warren,” said Chris Bloomstran, president and chief investment officer of Semper Augustus Investments, a Berkshire shareholder. “He fully understands the business, and I think he is the ideal candidate to run the company.”
Buffett has previously told shareholders to pay more attention to operating profits, a metric that has recently been affected by exchange rate fluctuations. The latest results show that, factoring in currency changes, Berkshire’s earnings rose 34% year-on-year to $13.5 billion.
According to the financial report data, part of the profit growth comes from Berkshire’s insurance business, with its subsidiary GEICO increasing the number of policies during the quarter. The entire insurance underwriting business’s profit grew to $2.4 billion over the past 12 months, a twofold increase compared to the same period last year.
Although the U.S. hurricane season has been relatively mild this year, the company still suffered $1.1 billion in losses from California wildfires, with the Los Angeles area being severely affected.
The group’s energy business had a more challenging quarter. Berkshire reported an additional $100 million in wildfire loss reserves. Its utility subsidiary PacifiCorp is still dealing with class-action lawsuits related to the 2020 Oregon and California wildfires.
Berkshire is known for its long-term holdings and is one of Apple’s largest shareholders. Although Buffett has not disclosed whether he reduced his holdings in the iPhone maker during the third quarter, he has gradually trimmed his position in recent years.
It is worth noting that despite selling some investments, Berkshire’s total stock investments still rose to $283 billion this quarter.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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