6 bonkers stats revealed in Warren Buffett’s latest stock selling spree

When Warren Buffett's cash balance goes up, it's often a good indicator of where the world's most famous investor believes valuations are at and how small the opportunity set is. Of course, Buffett is not infallible, and no investor is perfect. But given Berkshire Hathaway (NYSE: BRK.A and NYSE: BRK.B)'s stock has delivered more than double the S&P 500 (on a total return basis) over the last seven decades, it pays to listen.

In the most recent quarterly report released Sunday, it was revealed that Berkshire Hathaway made the following moves.  

6 'bonkers' stats from the Berkshire Hathaway Q3 Report

1. Cash balance soars 17% from US$276.9 billion to US$325.2 billion. In fact, by one estimate, his cash pile now exceeds the value of the entire stock portfolio (US$312 billion).
2. This cash balance is larger than the market cap of all but 27 public companies in the world.
3. Sold 100 million shares (equivalent to 25% of its stake or around US$15 billion) in Apple (NASDAQ: AAPL)
4. Sold US$10.5 billion worth of Bank of America (NYSE: BAC) stock
5. Although known for its long-term investments, the Berkshire team have sold more than US$166 billion in stocks they've bought in the last two years
6. This is the 8th consecutive quarter where Berkshire was a net seller of stocks. Berkshire bought just US$1.5 billion in stocks last quarter (we'll find out which stocks he bought next week when the firm's 13F filing is due)

In fact, by one estimate, his cash pile now exceeds the value of the entire stock portfolio (US$312 billion). 

And despite his constant selling of the iPhone maker, Apple remains Buffett's largest individual holding and Buffett remains Apple's largest individual shareholder.

Buffett is also known for his portfolio's heavy concentration. The five largest holdings in the 43-stock portfolio make up 70% of the portfolio.

• American Express Company (NYSE: AXP) – $41.1 billion; 
• Apple Inc. – $69.9 billion; 
• Bank of America Corporation – $31.7 billion; 
• The Coca-Cola Company (NYSE: KO) – $28.7 billion and 
• Chevron Corporation (NYSE: CVX) – $17.5 billion

It should be noted that while the public holdings are concentrated, this 43-company figure does not include the other 70+ companies that are wholly owned by Berkshire Hathaway. Those companies include insurers like Geico and railroad businesses like BNSF.

Is too much cash a bad thing?

Professional investors speaking on US media overnight have said that Buffett's moves to sell more of the firm's stake in Apple make sense given how outsized the position is relative to the rest of the portfolio. But some have also asked whether having 1/3 of your public company's market capitalisation in cash is a bad thing. That's where R360 Managing Partner Barbara Goodstein sees differently. In an interview with CNBC, Goodstein offered the following:

"That doesn't make us nervous. That gives us even more confidence he is getting ready to do something. This isn't just a war chest. This is a warning that he is going to make a move and the last time he made a big move in 2016, he made an acquisition. We don't think there's anything to be nervous about. He's a very disciplined investor and this is just another sign of that discipline."

The huge cash pile could also have something to do with his succession. Buffett, who is 94 years old, has already flagged a successor to his empire - 62-year-old Greg Abel. Perhaps he wants to leave a giant pile of cash for Abel to leave his mark on the Berkshire legacy.

Of course, it's also just simply a sign that Buffett, the God of value investors, does not see a lot of value in this market. 

"Berkshire is a microcosm of the broader economy," Cathy Seifert, an analyst at CFRA Research wrote overnight. "Its hoarding cash suggests a 'risk-off' mindset, and investors may worry what it means for the economy and markets."

Could they do buybacks?

Berkshire doesn't pay dividends but they have been known to be generous with buybacks. This was especially true during COVID when Buffett bought back nearly US$10 billion in Berkshire stock during Q3 2020 alone. But that does not seem to be the case this time. Although Berkshire boosted its cash balance by nearly US$50 billion, Buffett didn't buy back any of his own stock in the last quarter. 

Berkshire bought back just $345 million of stock in Q2 2024 as well. With no stock bought back this quarter, that takes total stock buybacks for 2024 to just under US$3 billion. If that holds, Barron's data calculates that would be the smallest amount since 2018. The buybacks peaked at $27 billion in 2021.

One last fun fact

Given Berkshire's current cash balance, it could buy all of the following (based on today's market capitalisation and at today's current AUD/USD rate:)

• CBA - twice
• CBA and BHP
• All of the other four major banks combined (NAB, ANZ, Westpac, and Macquarie Group)
• Newmont - 6.25 times over
• This luxury house in Leura with its 11 land titles and 5.5 acres... 54,851 times (at its passed-over vendor bid of $9 million)

But let's just say I'd be surprised if Warren's digging around in Australian property for his next big investment...