Investor sentiment wasn’t helped by news that Berkshire Hathaway chief Warren Buffett has slashed his stake in Apple and dramatically increased his cash pile. Is Buffett bearish?
Stocktake has previously cautioned about reading too much into headlines about Berkshire’s “record” cash holdings (disclosure: I own shares in Berkshire). That’s because as Berkshire’s portfolio and market capitalisation grows over time, so will its cash holdings. However, the scale of Buffett’s selling is notable.
Buffett almost halved his stake in Apple. Berkshire’s cash holdings have soared from $189 billion to $277 billion. Buffett sold $97 billion of stocks in the first half of 2024 and bought just $4.3 billion. He has been a net seller of stocks for seven straight quarters.
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Indeed, following a 19 per cent rise in 2024, Buffett even appears wary about Berkshire Hathaway stock. He bought back just $345 million of Berkshire stock in the second quarter, compared to $2.6 billion and $2.2 billion in the previous two quarters.
There are some qualifiers. First, Buffett expects capital gains taxes to rise and had signalled he would take profits in advance of this. Second, reducing his Apple shareholding looks prudent, given it accounted for half of Berkshire’s equity portfolio six months ago (even now, it owns some $180 billion in Apple shares or roughly 30 per cent of its stock portfolio). Third, Berkshire’s cash pile is roughly 30 per cent of its market capitalisation. That’s high, but it was higher in early 2020 and also in 2004 when it peaked at nearly 40 per cent.
Still, whatever about being bearish, Buffett’s sales are not the action of someone who is bullish. “We only swing at pitches we like,” he said earlier this year. Right now, he’s not finding much to like.
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