#Warren #Buffetts #Berkshire #Hathaway #Sells #Apple #Stock #Boosts #Cash #Pile #Record
Key takeaways
- Warren Buffett’s Berkshire Hathaway reported a drop in third-quarter profits while its cash pile swelled to a record high of more than $320 billion.
- Berkshire reduced its stakes in both Apple and Bank of America, bringing its total proceeds from stock sales this year to about $133 billion.
- Berkshire paused stock buybacks in the fourth quarter of last year as its stock price rose to a record high.
Berkshire Hathaway (BRK.A; BRK.B) on Saturday reported a drop in third-quarter earnings while its cash pile swelled to a record high as it trimmed its stakes in Apple (AAPL) and Bank of America (BAC).
Berkshire reported third-quarter operating profit of $10.1 billion, down from $10.7 billion a year ago and $11.6 billion in the previous quarter.
Berkshire’s cash hoard swelled to a record high
The group’s cash pile swelled to a record $320.3 billion from $271.5 billion in the second quarter. The vast majority of Berkshire’s money ($288 billion) is invested in short-term Treasuries.
Investors are watching the company’s cash hoard closely for its potential as “dry powder,” money that can be invested in businesses that meet Berkshire’s value-focused acquisition and investment strategy.
Berkshire paused stock buybacks this quarter. Buffett has touted the benefits of buybacks in the past, writing in his 2022 letter to shareholders: “It should be emphasized that gains from value-accumulating buybacks benefit everyone Owners – in all respect.” But Buffett is known to be frugal, and Berkshire’s stock price rose to a record high this quarter.
Buffett sells shares of Apple and Bank of America
The value of Berkshire’s stock portfolio fell to $271.7 billion from $284.9 billion in the previous quarter. Berkshire has aggressively trimmed its stock positions this year to take profits from the booming stock market. The company has sold $133 billion worth of shares so far this year, compared to just $33 billion in the first nine months of 2023.
The value of Berkshire’s shares in Apple indicates that Buffett has continued to reduce his stake in the iPhone maker. Apple shares rose more than 10% in the third quarter. However, Berkshire’s stake shrank from $84.2 billion to $69.9 billion, indicating that Buffett sold about a quarter of his position. Buffett had already disposed of nearly half of his Apple shares, worth about $175 billion at the end of 2023, in the first six months of the year.
The only other major change Buffett made to Berkshire’s five largest stock positions was his well-documented unloading of Bank of America shares. Berkshire began reducing its stake in the bank in mid-July. At the end of the quarter, Berkshire’s stake was $31.7 billion, down from $41.1 billion at the end of June.
Hurricanes hit insurance profits
Berkshire’s insurance business investment income rose 50% to nearly $3.7 billion in the quarter. These gains were offset by a 70% decline in insurance underwriting profits, which totaled $750 million.
Berkshire estimates that losses from Hurricane Helen wiped out $565 million in operating profit during the quarter. The company estimated that losses from Hurricane Milton, which struck Florida in early October, could fall between $1.3 billion and $1.5 billion. These losses will be reflected in the company’s results for the fourth quarter.
Profits at Berkshire Hathaway Energy, which it recently turned into a wholly-owned subsidiary, tripled to $1.6 billion, helped by higher profits from natural gas pipelines and lower litigation costs.
Profits at Berkshire’s rail business rose 13%, benefiting from increased volumes and lower operating costs.
#Warren #Buffetts #Berkshire #Hathaway #Sells #Apple #Stock #Boosts #Cash #Pile #Record
