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Investors are unsure how to position their portfolios ahead of the US presidential election.
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Warren Buffett made it clear in Berkshire Hathaway’s third-quarter results that he was cautious.
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The investor built up a record pile of cash, cut his two biggest stock bets and halted the buybacks.
Investors are wondering how to play the market in the run-up to Tuesday’s US presidential elections. Warren Buffett showed off his poker hand on Saturday that he had amassed a record amount of cash, cut his two biggest stock bets and stopped buying shares of his own company last quarter.
The 94-year-old Berkshire Hathaway boss has refrained from endorsing Donald Trump or Kamala Harris, likely because he fears the backlash could hurt his employees and shareholders. But his conglomerate’s third-quarter results provided new evidence that he is wary of heady stock valuations and eager to take some chips off the table.
Between July and September 30, Buffett’s company’s pile of cash, government bonds and other liquid investments grew to an unprecedented $325 billion (or $310 billion, subtracting nearly $15 billion in debt for the purchase of government bonds). Two years ago, Berkshire had less than $110 billion in cash.
The legendary investor and his team sold $36 billion worth of stock and only made purchases worth $1.5 billion, marking their eighth straight quarter as a net seller.
They sold a net $127 billion worth of stocks in the first nine months of 2024 – more than triple the net $24 billion they jettisoned last year and a sharp shift from the net $34 billion worth of stocks they sold bought them in 2022.
Notably, Berkshire cut its bets on Apple and Bank of America, its two largest stock holdings, at the start of the quarter. The company cut its stake in the iPhone maker by 60% between January and September, dropping its value from about $174 billion to $70 billion.
Berkshire also cut its stake in the banking giant by about 23% between mid-July and early October, dropping its value to below $32 billion.
Buffett has said that buybacks only make financial sense if a stock is trading at a discount to its intrinsic value. After buying back $20 billion worth of Berkshire stock between early 2022 and June 30 of this year, Buffett didn’t buy back a single share last quarter — a strong signal that he no longer considers his company’s stock a bargain after the price surge of more than 20%. reached record highs this year.
“If the world’s most famous living investor continues to sell stocks and sits on a sizable pile of cash, that tells us something very important about the state of the market,” Russ Mould, investment director at AJ Bell, said in a note on Monday.
