Warren Buffett dumping stocks

Warren Buffett’s Berkshire Hathaway has been a net seller of stocks for the past four quarters, offloading more than $5 billion worth of US and international shares in the third quarter of 2023 alone. 

Berkshire released its earnings for the third quarter of 2023 at the end of last week, revealing a record cash pile and the company’s continued selling of assets.

The sale of $5 billion in shares increased Berkshire’s divestments of listed shares to nearly $40 billion over the past year.

The earnings report also showed that Berkshire sold over 12 million shares in American oil giant Chevron before it announced the acquisition of Hess for $53 billion last month. 

Buffett’s portfolio of shares shrank to $319 billion from $353 billion at the end of June, partly due to the sale of shares but more so because of a broad decline in the stock market. 

The value of Berkshire’s stake in Apple, its largest holding, dropped by over $20 billion due to the decline in the technology giant’s share price. 

In two weeks, Berkshire’s portfolio will be revealed when the company completes its 13F filing, which requires companies and investors with over $100 million in assets to reveal their portfolio publicly. 

Buffett’s investment shifts are closely scrutinised by fund managers and the wider public for clues as to where the 93-year-old investor sees attractive returns.

The company posted a net loss of $12.8 billion for the third quarter, compared to a loss of $2.8 billion a year earlier. 

This was due to the rise in investment losses to $23.5 billion caused by a sharp market downturn in the quarter. The S&P 500 dropped 3.6% in the three months through September. 

However, Berkshire’s operating earnings rose to $10.8 billion as the company’s insurance businesses continued to perform well. 

Buffett has said operating earnings are the better gauge of the company’s performance.

Accounting rules require Berkshire to include unrealised gains and losses from its investment portfolio when it reports net income, so a slide in the stock market will weigh on its results even if Berkshire’s underlying businesses are performing well.

Record cash pile

Berkshire Hathaway has a record $157 billion pile of cash or cash equivalents despite the company’s quarterly loss widening due to a market downturn.

Buffett directed the proceeds from the sale of stocks and the cash generated by Berkshire’s businesses into cash and short-term US Treasury bonds. 

Berkshire benefitted from the rise in US interest rates, with interest income rising to $1.7 billion for the third quarter. Over the past year, it has earned $5.1 billion in interest. 

Charlie Munger, Berkshire’s vice chairman and Buffett’s longtime business partner, told the Wall Street Journal in a recent interview that the odds of another significant acquisition under the pair were “at least 50/50”.

In his 2023 letter to shareholders, Buffett said Berkshire was “prepared to do big deals” if the right opportunities came along. 

He also said he was “not worried” about the company’s large cash hoard, saying it was “a source of strength”.