Berkshire’s cash soars to $325 billion as Buffett sells Apple, BofA; running profit falls

By Jonathan Stempel

(Reuters) -Warren Buffett and Berkshire Hathaway (NYSE:) extended their retreat from stocks within the third quarter, extra slashing holdings in Apple and boosting cash to a yarn $325.2 billion.

In its quarterly yarn on Saturday, Berkshire acknowledged it sold about 100 million, or 25%, of its Apple shares (NASDAQ:) over the summer season, ending with about 300 million.

Berkshire has now sold more than 600 million of the iPhone maker’s shares in 2024, though Apple remained its largest inventory conserving, at $69.9 billion.

It sold $36.1 billion of inventory total, together with several billion dollars of Financial institution of The US shares, and bought factual $1.5 billion.

That made the quarter the eighth straight where Berkshire used to be a salvage seller of stocks.

The Omaha, Nebraska-primarily based mostly conglomerate additionally conducted no inventory buybacks for the first time since the 2nd quarter of 2018, and didn’t repurchase inventory within the first three weeks of October.

“Berkshire is a microcosm of the broader economic system,” acknowledged Cathy Seifert, an analyst at CFRA Compare in Recent York. “Its hoarding cash suggests a ‘threat-off’ mindset, and investors would possibly perchance perhaps perchance neutral dismay what it methodology for the economic system and markets.”

The Class A shares of Berkshire are up 25% this one year, whereas the has risen 20%.

Rising valuations enjoy fueled concerns among some investors that many stocks enjoy change into too costly.

Berkshire’s cash stake grew from $276.9 billion at the end of June, and is more than 10 instances the $30 billion cushion that Buffett has pledged to aid.

Buffett has made no predominant acquisitions of whole companies for his $975 billion firm since 2016.

Jim Shanahan, an analyst at Edward Jones in St. Louis, acknowledged the swelling cash hoard “begs questions about whether Buffett thinks stocks are over priced or an economic downturn is coming, or is making an strive to supply cash for a huge acquisition.”

In Could perchance neutral, Buffett acknowledged he expected Apple to stay Berkshire’s largest inventory investment, but selling made sense since the 21% federal tax rate on beneficial properties would likely grow.

OPERATING PROFIT FALLS

Berkshire’s quarterly running profit declined 6% to $10.09 billion, or about $7,019 per Class A share, missing analyst estimates of $7,611 per share per LSEG IBES.

The decline stemmed largely from underwriting losses on older insurance policies, insurance claims associated to Storm Helene in September, and currency losses from a strengthening U.S. greenback.

These offset improved profitability at the Geico automobile insurer, where accident claims fell. Profit additionally rose at the BNSF railroad, which shipped more consumer items, and Berkshire Hathaway Energy, where running expenses declined.

Seifert acknowledged Berkshire has prolonged benefited from its diversification but suffered “multi-pronged” weak point within the quarter.

This included a 19% income decline at the Pilot truck end chain, where fuel prices and marketing volumes fell. Berkshire additionally acknowledged “neutral about all” of its retail companies, together with its more than 80 automobile dealerships, are seeing income declines.

Obtain profits totaled $26.25 billion, when compared with a one year-earlier $12.77 billion loss, reflecting unrealized beneficial properties and losses in inventory investments corresponding to Apple.

This provides volatility to salvage results that Buffett urges investors to omit, and as a change address running performance.

HELENE, MILTON

Profit from insurance underwriting fell 69%, dented by losses from older policies, $565 million from Helene, and a financial wretchedness settlement tied to a defunct talc seller. This more than offset a 93% jump in Geico’s underwriting profit.

Shanahan called the policy losses a “big shock,” whereas Seifert acknowledged a bunch of Berkshire’s peers enjoy already addressed identical disorders. “This stands out by making Berkshire appear to be a laggard,” she acknowledged.

Berkshire additionally projected $1.3 billion to $1.5 billion of pre-tax losses within the fourth quarter from Storm Milton, which slammed into Florida in October.

Investment profits at Berkshire’s insurance companies, which aid extra special of Berkshire’s cash, rose 48% to $3.66 billion.

Such beneficial properties would possibly perchance perhaps perchance neutral gentle decline if the Federal Reserve continues reducing passion charges, or Buffett finds something big price shopping for.

Buffett “wants to invest every penny he can in companies that offer Berkshire an aid. Nonetheless at the identical time he’s entertaining to enact nothing,” acknowledged Tom Russo, a predominant at Gardner Russo & Quinn in Lancaster, Pennsylvania, who has invested in Berkshire since 1982.

“He’ll be there ready and loaded when varied investors are despairing or capital-constrained,” Russo added.

Berkshire’s operations additionally include many industrial and manufacturing companies, a huge valid estate brokerage, and retail companies corresponding to Dairy Queen and Fruit of the Loom.

On Oct. 31, Berkshire finished shopping the 8% of Berkshire Hathaway Energy it didn’t already enjoy.

Buffett, 94, has led Berkshire since 1965. He’s anticipated to at closing transfer management to Vice Chairman Greg Abel, 62.