OMAHA, Neb. (AP) — Warren Buffett has amassed over $325 billion in cash this year, a result of ongoing sales of his substantial holdings in Apple and Bank of America. Despite these sales, Buffett continues to benefit from the steady profits generated by Berkshire Hathaway’s diverse portfolio, as he has not pursued any major acquisitions recently.
In the third quarter, Berkshire Hathaway sold approximately 100 million shares of Apple, following a previous reduction of its investment in the technology giant last quarter. The company now holds around 300 million shares, valued at $69.9 billion at the end of September. While this makes Apple Berkshire’s largest investment, its worth has declined significantly from $174.3 billion at the end of last year.
Investors may find it disappointing that Berkshire did not buy back any of its own shares during this quarter, adding to concerns about the cash buildup. Analyst Cathy Seifert from CFRA Research suggests that shareholders might question Buffett’s cash accumulation: “Are they more pessimistic about the future economic and market picture than perhaps others are?”
Buffett mentioned at the annual meeting in May that part of the reason for selling his Apple shares was his anticipation of higher tax rates in the future. However, some, like Edward Jones analyst Jim Shanahan, speculate that the passing of Vice Chairman Charlie Munger last year may have influenced Buffett’s decision to divest, as the sales began shortly after Munger’s death. Shanahan noted that Buffett has traditionally not favored technology investments as much as Munger did.
“If Charlie Munger were still around, he might not have divested as aggressively—perhaps not at all,” Shanahan remarked.
Berkshire Hathaway recently reported third-quarter profits soaring to $26.25 billion, or $18,272 per Class A share, driven largely by investment gains. This contrasts sharply with last year’s results, which showed unrealized investment losses leading to a significant loss of $12.77 billion, equivalent to $8,824 per Class A share.
Buffett has always advised investors to focus more on Berkshire’s operating earnings for a clearer picture of the company’s performance, as these figures exclude investment fluctuations. For this quarter, Berkshire’s operating earnings dipped only slightly by about 6%, amounting to $10.09 billion, or $7,023.01 per Class A share. This is a decrease from last year’s operating profit of $10.8 billion, or $7,437.15 per Class A share. Analysts from FactSet Research had predicted operating earnings of $7,335.11 per share.
Berkshire’s overall revenue remained stable at $92.995 billion, compared to last year’s $93.21 billion, exceeding analysts’ forecasts of $92.231 billion.
The conglomerate maintains a wide array of businesses, including insurance companies like Geico, BNSF railroad, various utility companies, and a mix of retail and manufacturing brands such as Dairy Queen and See’s Candy.
One of Berkshire’s insurance units, Guard, disclosed some additional losses from previous years as management reassessed its policies. Additionally, Berkshire clarified the acquisition payments made to obtain the remaining shares in its utility business from the estate of former board member Walter Scott. The total compensation was about $4 billion, including $2.4 billion in cash, $600 million in debt, and over $1 billion in Class B shares given to the Scott family. This payment suggests that the Scott family did not receive as favorable a price for their 8% stake compared to a previous transaction, wherein Berkshire Vice Chairman Greg Abel sold a smaller stake for $870 million two years ago. Abel is positioned to take over as CEO from the 94-year-old Buffett should anything happen to him.
