Berkshire Hathaway's Cash Reserves Surpass $325 Billion Amid Share Sales

OMAHA, Neb. — Warren Buffett, the renowned CEO of Berkshire Hathaway, has amassed over $325 billion in cash following significant sales of his company's stock in tech giants Apple and Bank of America this year. While continuing to earn substantial profits from Berkshire's diverse range of businesses, Buffett has not pursued any major acquisitions.

Berkshire Hathaway disclosed that it sold approximately 100 million more Apple shares in the third quarter of the year, continuing a trend that saw them halve their investment in the tech company in the previous quarter. The remaining stake of about 300 million shares was valued at $69.9 billion at the end of September, making it Berkshire's largest single investment, although this has been significantly reduced from its value of $174.3 billion at the end of last year.

Shareholders may be left wondering about Buffett's strategy, especially as Berkshire did not buy back any of its own shares during the quarter. Analyst Cathy Seifert from CFRA Research highlighted that investors might be concerned about why Buffett is accumulating so much cash, raising questions about whether he has a more pessimistic view of future economic conditions compared to others.

Buffett indicated at the recent annual meeting in May that part of his rationale for selling Apple shares is the expectation of higher tax rates in the future. Additionally, some analysts speculate whether the passing of Vice Chairman Charlie Munger last year has influenced Buffett's decision to sell. Munger was known for his comfort with technology investments, which raises questions about whether Buffett would have made the same choices had Munger been alive.

Despite the significant stock sales, Berkshire Hathaway's profitability soared in the third quarter, driven by investment gains that brought in $26.25 billion, or $18,272 per Class A share. This result starkly contrasts last year's performance, where unrealized investment losses led to a loss of $12.77 billion, or $8,824 per Class A share.

Buffett has consistently advised investors to focus on Berkshire's operating earnings for a clearer picture of its business performance, as these figures exclude the volatility associated with investments. By this measure, the company's operating earnings were down about 6% to $10.09 billion, or $7,023.01 per Class A share, compared to last year's $10.8 billion, or $7,437.15 per Class A share.

Berkshire's overall revenue remained relatively stable at $92.995 billion, compared to $93.21 billion a year ago. This figure slightly exceeded expectations from three analysts surveyed.

Berkshire Hathaway's portfolio consists of various businesses, including insurance companies like Geico, the BNSF railroad, several utilities, and various retail and manufacturing companies, such as Dairy Queen and See's Candy. However, one of its insurance units, Guard, reported additional losses after a policy reassessment.

In a notable move during the quarter, Berkshire revealed it paid about $4 billion to acquire the remaining shares of its utility business from the estate of former board member Walter Scott. This involved paying $2.4 billion in cash, taking on $600 million in debt, and providing the Scott family with Class B Berkshire shares valued at over $1 billion.

Greg Abel, who is expected to succeed the 94-year-old Buffett as CEO upon his death, sold his 1% stake in the utility business two years ago for $870 million, indicating that the Scott family did not receive as favorable a price for their larger 8% stake.

Buffett, Berkshire, Apple