Berkshire Hathaway’s cash reserves are at a record high of $325.2 billion as Warren Buffett quickly exits one of his most profitable trades of the past decade.
Omaha’s Oracle and its conglomerate holding company Berkshire began selling shares of Apple late last year, unwinding a big bet on the tech company it opened in 2016.
Berkshire accelerated its sales pace earlier this year and by the end of the second quarter it had halved its stake in Apple. Financial times reported, which helped push its cash reserves to a record high of $277 billion at the time.
But by the end of the third quarter, Berkshire Hathaway broke its previous cash record by selling another quarter of its stake in the tech company, or 100 million shares, bringing its total number of shares to 300 million, from 400 million.
In just over a year, the company has sold more than two-thirds of its stake in Apple. Although the technology company is still the largest holding with $69.9 billion in shares, at its peak Apple represented $178 billion in Berkshire Hathaway’s portfolio.
The Apple sales frenzy comes at a time when Buffett has been reducing his equity holdings across the board over the past two years. In the third quarter, Berkshire bought just $1.5 billion worth of stock, making it a net seller of stocks for the eighth consecutive quarter. CNN reported.
Berkshire’s $325.2 billion in cash and short-term government bonds now outweigh the market value of its shares, which stood at $271.6 billion at the end of the third quarter, according to its most recent earnings report. While some have questioned Berkshire’s large stock sales, the company has done well over the past three years: its shares are up 52%, which is better than the S&P 500’s 22% gain over the same period.
Check out this interactive chart on Fortune.com
Part of the reason for the massive selling of stocks lies in Buffett’s prediction that the tax rate on capital gains will rise in coming years, possibly to help reduce the federal deficit, which was about 122% of the nation’s GDP in 2023 . .
“I would say that with the current fiscal stance, I think something has to be done and I think higher taxes are very likely,” Buffett said at Berkshire’s annual shareholder meeting in May.
Vice President Kamala Harris has said that if elected president, she would raise the corporate tax rate from 21% to 28%. Meanwhile, former President Donald Trump has promised to lower the corporate tax rate to 15% for companies that produce products in the US.
While Buffett said Berkshire Hathaway would keep Apple as its largest investment, he added that he wanted to keep more money on hand.
“But under the current circumstances, I don’t mind building up the cash position at all,” Buffett said in May. “I think when I look at the alternative of what’s available in the stock markets and I look at the makeup of what’s happening in the world, we find it quite attractive.”
Although Buffett said at the May meeting that the capital gains tax rate, which is paid by investors when they sell assets such as stocks, is likely to rise, he is ultimately unconcerned.
“We always hope at Berkshire that we can pay substantial federal income taxes, we think that’s appropriate,” he said.
This story originally appeared on Fortune.com
