Dan Brouillette/Bloomberg via Getty Images
-
Warren Buffett’s Berkshire Hathaway remains a net seller of shares after divesting a quarter of its stake in Apple in recent months, regulatory filings show.
-
The holding company expanded its cash inventory for the ninth quarter in a row, bringing its cash inventory to a record level.
-
The total value of the stock market has risen to roughly double U.S. GDP, a ratio Buffett previously called “playing with fire.”
Warren Buffett is stockpiling money. His Berkshire Hathaway (BRK.A; BRK.B) holding company continued to sell more than it bought in the third quarter, including a quarter of its stake in Apple (AAPL), regulatory filings revealed Thursday.
Berkshire Hathaway cut its large stake in Apple at the end of September from nearly $175 billion at the beginning of the year to about $70 billion. The latest sell-off was hinted at earlier this month by Berkshire’s third-quarter earnings report, but had yet to be officially announced to the public. However, the iPhone maker still represents about a quarter of Berkshire’s $266 billion stock portfolio.
In addition to Apple, Berkshire sold approximately 235 million shares of Bank of America (BAC). This was largely known, as Berkshire was required to report its sales of BofA stock for the entire quarter as it owned more than 10% of the lender.
The filings come after Berkshire Hathaway said earlier this month that its cash pile increased to a record $320.3 billion in the third quarter, up from $271.5 billion in the previous quarter. Of that amount, $288 billion is invested in short-term government bonds. Berkshire has raised cash in each of the last nine quarters.
Investors are closely watching Berkshire’s cash supply because of its “dry powder” potential. One possible reason why Buffett is keeping that powder dry: The “Oracle of Omaha” may not see much room for growth in the market.
The ratio of stock market capitalization to GDP, also called the ‘Buffett Indicator’, is used to determine whether an overall market is undervalued or overvalued. The total value of the stock market reached a record high of $58.13 trillion on Monday, “an unprecedented 198.1% of US GDP last quarter.” Business insider wrote, citing data from Wilshire Indexes.
That figure is a major red flag for Buffett. In a famous one Fortune In a 2001 article, Buffett said, “When the ratio approaches 200% — as it did in 1999 and part of 2000 — you’re playing with fire.”
Correction – November 15, 2024: The article has been updated to correctly reflect the size of the US stock market relative to GDP.
