Berkshire Hathaway Sells Apple and Bank of America Stocks for Billions

OMAHA, Neb. — Warren Buffett is now sitting on more than $325 billion in cash after selling off billions of dollars worth of shares in Apple and Bank of America this year. Despite these sales, Buffett continues to receive a steady stream of profits from Berkshire Hathaway’s diverse range of businesses without making any significant new acquisitions.

Berkshire Hathaway disclosed that it sold approximately 100 million additional shares of Apple in the third quarter, following a previous reduction in its investment in the tech giant. By the end of September, Berkshire held around 300 million shares of Apple, valued at $69.9 billion, making it the company’s largest single investment. However, this stake has been significantly reduced from its worth of $174.3 billion at the end of the previous year.

In addition to these stock sales, investors were disappointed to learn that Berkshire did not repurchase any of its own shares during the latest quarter.

Cathy Seifert, an analyst at CFRA Research, noted that shareholders may be questioning why Buffett is accumulating such a large cash reserve, pondering whether it indicates a more pessimistic outlook on the economic and market landscape compared to others.

Buffett mentioned at the annual meeting in May that one reason for his decision to sell some Apple shares is the expectation of rising tax rates in the future. On the other hand, Jim Shanahan, an analyst at Edward Jones, speculated that the selling could be partly influenced by the recent passing of Vice Chairman Charlie Munger. Shanahan remarked that Buffett has historically been less at ease with technology companies compared to Munger.

“If Charlie Munger were still alive, perhaps he wouldn’t have sold down the position quite as aggressively—maybe not at all,” Shanahan said.

Berkshire reported on Saturday that investment gains propelled its profits for the third quarter to $26.25 billion, or $18,272 per Class A share. This represents a remarkable contrast to last year when unrealized investment losses resulted in a net loss of $12.77 billion, or $8,824 per Class A share.

Buffett has emphasized the importance of focusing on Berkshire’s operating earnings to gauge the performance of its businesses. These earnings provide a clearer picture as they exclude investment results, which can fluctuate significantly from one quarter to another due to changing market values.

For the recent quarter, Berkshire reported operating earnings of $10.09 billion, or $7,023.01 per Class A share, reflecting a slight decline of about 6% compared to last year’s $10.8 billion, or $7,437.15 per Class A share. Analysts surveyed by FactSet had anticipated operating earnings of about $7,335.11 per Class A share.

In terms of revenue, Berkshire’s figures remained relatively stable at $92.995 billion, only slightly below the $93.21 billion from a year ago and surpassing the $92.231 billion forecasted by analysts.

Berkshire Hathaway owns a variety of businesses, including insurance companies such as Geico, BNSF railroad, and numerous utilities along with a mix of retail and manufacturing companies, featuring well-known brands like Dairy Queen and See’s Candy.

One of Berkshire’s insurance units, Guard, reported additional losses from previous years after managers reevaluated its policies.

During the quarter, Berkshire clarified how much it paid to acquire the remainder of its utility business from the estate of former board member Walter Scott, disclosing a total compensation amount of about $4 billion. This included $2.4 billion in cash, $600 million in debt, and approximately $1 billion in Class B Berkshire shares. This amount was less favorable for the Scott family compared to a previous sale of a smaller stake by Berkshire Vice Chairman Greg Abel a couple of years prior.

Abel is designated to succeed the 94-year-old Buffett as CEO upon his passing.

Berkshire, Buffett, Investments