Source: Wall Street See

Investment legend Buffett is causing a market-shaking "clearance-style" sell-off.

Following a nearly 50% reduction in the second quarter, $Berkshire Hathaway-A (BRK.A.US)$ / $Berkshire Hathaway-B (BRK.B.US)$ in the third quarter, reduced another 25% of $Apple (AAPL.US)$ In stocks, after selling 0.1 billion shares, only holding 0.3 billion shares. Since the beginning of the year, its Apple holdings have plummeted from 0.905 billion shares to 0.3 billion shares, a decrease of 67%. Although Apple remains its largest position, the market cap of the holding has dropped from $174.3 billion at the beginning of the year to $69.9 billion.

Buffett's 'sell-off offensive' goes far beyond this. In the third quarter, Berkshire Hathaway net sold $34.6 billion worth of stocks, marking the eighth consecutive quarter of being a net seller of stocks. Among them, its holdings of Bank of America also reduced by 23% to 0.799 billion shares. What's even more eye-catching is that this quarter, the company has suspended the buyback of its own shares for the first time since 2018. $Bank of America (BAC.US)$ The weather is good today The weather is good today.

Amid continued selling, Berkshire Hathaway's cash reserves have surged to a historical high of $325.2 billion, a significant increase from the $168 billion reserves at the beginning of the year. In stark contrast to the call to "buy US stocks" during the 2008 financial crisis, the 94-year-old "Oracle of Omaha" seems to be hinting at concerns about the current US stock market through actions.

Although Buffett attributed some of the reductions in May to concerns about a possible increase in capital gains tax rates, such a massive cashing out action, coupled with a sharp decline in overall market interest including in his own stocks, may indicate that this investment guru's cautious attitude towards the US stock market is on the rise.

Apple's billion-dollar big sell-off!

According to the latest third quarter financial report released by Berkshire Hathaway, the company significantly sold about 0.1 billion shares of Apple stocks in that quarter, reducing the number of shares held to 0.3 billion.

From the perspective of holdings, since the beginning of 2024, Berkshire Hathaway has significantly reduced its holdings from 0.905 billion shares to 0.3 billion shares, a decrease of up to 67%.

From the market cap perspective, as of September 30, the company only held $69.9 billion of Apple stocks, lower than $84.2 billion on June 30, a 62% decrease compared to $135.4 billion on March 31, and a 70% decrease compared to $174.3 billion on December 31, 2023.

It is worth mentioning that most of these Apple stocks were acquired at an average price of $35 per share between 2016 and 2018. As of last Friday's closing, Apple's stock price was $222.91.

Berkshire Hathaway stated that the company's investments in the first three quarters of 2024 have realized a profit of $76.5 billion, with a significant portion related to Apple.

Holding cash, not buying back!

Berkshire Hathaway's selling spree is not limited to just Apple.

The financial report shows that in the third quarter, the company's net stock sales reached $34.6 billion, marking the eighth consecutive quarter as a net seller of stocks.

During the same period, the company's holdings in Bank of America were reduced from 1.033 billion shares to 0.799 billion shares, a decrease of 23%. As a result, Bank of America's stocks dropped from the second largest position to the third, surpassed by (with a market cap of approximately 42 billion US dollars). $American Express (AXP.US)$In contrast, the company's holdings in American Express, coca-cola (KO.US) And.$Chevron (CVX.US)$ remain relatively stable.

Of particular note, Berkshire, since changing its buyback policy in 2018, has suspended its repurchase program for its own stock for the first time in the third quarter. This move seems to indicate that even for its own stock, Buffett does not find the current price attractive.

Under continuous shareholding reductions, Berkshire Hathaway's cash reserves hit a historical high in the third quarter. As of the end of the third quarter, the company's cash reserves surged to $325.2 billion, a significant increase from the beginning of the year of $168 billion.

Although Buffett attributed part of the shareholding reduction at this year's May shareholders meeting to concerns about the U.S. government potentially raising the capital gains tax rate, such a large-scale "clearance-style" operation seems to imply more of his cautious approach to current market valuations.

From an operational performance perspective, Berkshire Hathaway achieved an operating profit of $10.09 billion in the third quarter, a 6% decrease from $10.76 billion in the same period last year. The profit decline was mainly due to a significant decrease in underwriting income in the insurance business and a $1.1 billion exchange rate loss.

Specifically, insurance underwriting profit decreased by 69% year-on-year, partially due to a $0.565 billion loss from Hurricane Helen and a court settlement related to a bankrupt talc supplier. However, the car insurance company, GEICO, under its umbrella, performed well, with underwriting profit doubling. Profits from railroad transportation and energy business also improved.

It is worth noting that the 94-year-old "Oracle of Omaha" had stated in May of this year that he is not in a hurry to invest unless extremely low risk and high return opportunities are found. This statement contrasts sharply with his call to "buy US stocks" during the 2008 financial crisis.

It is worth mentioning that if Buffett's indicator (the ratio of total market cap to GDP) is used as a measure, the current US stock market is indeed not considered cheap.

Editor / jayden