On November 2nd local time, Berkshire Hathaway, a subsidiary of Warren Buffett, released its financial report for the third quarter of this year, showing that after reducing its stake in Apple by nearly 50% in the second quarter, the company also reduced its stake in Apple by 25% in the third quarter. At the same time, the value of the stocks purchased in the US stock market was only $1.5 billion.
According to the financial report, Berkshire Hathaway has been a net seller of stocks for eight consecutive quarters, while hoarding an unprecedented amount of cash in the investment industry: as of the end of the third quarter, the company's total cash and cash equivalents amounted to $325.2 billion, a historic high.
Reduce holdings of Apple and Bank of America
As of the end of the third quarter, 70% of Berkshire Hathaway's equity investments at fair value were concentrated in five companies: American Express, Apple, Bank of America (hereinafter referred to as Bank of America), Coca Cola, and Chevron.
Among them, Berkshire Hathaway holds American Express worth $41.1 billion, Apple worth $69.9 billion, Bank of America worth $31.7 billion, Coca Cola worth $28.7 billion, and Chevron worth $17.5 billion.
Compared to the end of the second quarter, Berkshire Hathaway continued to reduce its holdings of Apple and Bank of America. Berkshire Hathaway sold 100 million shares of Apple stock in the third quarter, reducing its holdings from 905 million shares to 300 million shares since the beginning of this year, a decrease of about two-thirds.
Buffett once described Apple as one of Berkshire Hathaway's "Big Four" in 2022. As of 2021, Buffett's investment in Apple was worth over $160 billion at one point, accounting for about 40% of the company's stock investment portfolio.
At the company's shareholders' meeting in May this year, he also stated that Apple is a "better company" than Coca Cola and American Express, the latter two of which are long-term holdings of Berkshire Hathaway.
Buffett said to shareholders at the time, "Unless there is a major event that truly changes our capital allocation strategy, Apple will be our biggest investment target." "But under current conditions, I don't mind establishing a cash position at all," he said. "I think when I look at other options in the stock market and the composition of what is happening in the world, we will find that it (Apple's stock) is quite attractive.
According to the financial report, the company generated $97 billion in profits from the sale of $133 billion worth of stocks this year, which is equivalent to a post tax return of $76.5 billion for the group.
Berkshire Hathaway's long-term shareholder JSTern& Christopher Rossbach, Chief Investment Officer of Co, believes that "this is still the greatest deal ever made by the greatest investor. His investment in Apple has determined his fate over the past decade, and now he is selling Apple stock for valuation reasons, proving his adherence to principles and unprecedented scale
In addition to selling off Apple stocks, Buffett also significantly reduced his holdings in Bank of America. In October, he reduced his stake in Bank of America to below 10% after selling over $10.5 billion worth of Bank of America stock.
Why Buffett hoards a large amount of cash
Berkshire Hathaway's holdings of large amounts of cash and cash equivalents have prompted people to reflect on Buffett's motives and investment prospects. Buffett once said that the mountain of liquidity gives Berkshire Hathaway the ability to remedy crises.
CFRA Research analyst Cathy Seifert said that shareholders will want to know why Buffett holds so much cash& amp; quot; Is he more pessimistic about the future economic and market situation than others? She added.
But Edward Jones analyst Jim Shanahan has a different view. He said he doesn't know if part of the reason why Buffett started selling Apple stocks is related to the death of Munger, a longtime friend of Buffett and vice chairman of Berkshire Hathaway, last year, as the selling began shortly after Munger's death. Shanahan said that Buffett has never been as familiar with technology companies as his long-term partner Munger; quot; If Munger were still alive, perhaps Buffett wouldn't be so actively selling apples, maybe not at all. He said.
In addition, Berkshire Hathaway's third quarter financial report showed a decline in operating profit due to the impact of two hurricanes that hit the southeastern United States on the company's insurance business.
Berkshire Hathaway stated that Hurricane Helen caused $565 million in losses in the third quarter, while Hurricane Milton, which hit Florida a few days later, is expected to cause $1.3 billion to $1.5 billion in losses in the fourth quarter. Overall, the company's operating profit decreased by 6% year-on-year, to $10.1 billion.
On the 23rd, Berkshire Hathaway issued a statement on its official website stating that Buffett will not endorse or provide support for political candidates.