Warren Buffett's Berkshire Hathaway has been engaged in one of its most significant portfolio shake-ups in years. The company has significantly reduced its holdings in several major companies, including Apple, Bank of America, and Snowflake.
The most notable change is the near-halving of Berkshire's stake in Apple. This decision, disclosed in the company's June quarter financial report, has garnered significant attention from analysts and investors.
In addition to Apple, Berkshire has been selling shares in other companies. The company sold billions of dollars worth of Bank of America shares in July and August. Furthermore, a recent 13F filing revealed that Berkshire had completely sold out of Paramount and reduced its stakes in eight other companies.
Over the past year, Berkshire has also halved its stake in BYD. This Chinese electric vehicle and battery manufacturer was a significant holding for Berkshire since 2008.
If Berkshire continues to sell shares, particularly in Bank of America, it may have more cash in US Treasury notes and short-term securities than in equities by the end of next month. As of June 30, Berkshire held $277 billion in cash and $235 billion in short-term T-notes.
The company's share portfolio was valued at $280 billion at the end of June, which is the same as it was in mid-2020. The portfolio's value has fluctuated over time, reaching a high of $351 billion at the end of 2023. Berkshire is currently invested in 41 companies, down from 49 at the end of 2022.
The reduction in Berkshire's holdings suggests that Warren Buffett may be becoming more cautious about equity investments. He has also been winding down buy-ins of Berkshire shares from friends and shareholders.
The sales of Bank of America shares have been puzzling. Despite expressing confidence in the company, Buffett has sold a significant portion of his holdings. As of June 30, Berkshire held 1.03 billion Bank of America shares, valued at $41 billion. After recent sales, the company now holds about 928 million shares, worth approximately $37 billion.
The proceeds from these sales have likely been invested in short-term bonds, increasing Berkshire's cash holdings. However, the value of Berkshire's equity holdings, including Apple shares, has increased since the end of June.
Berkshire's share sales and reduction in portfolio size have resulted in a higher cash position than in recent years. The company is now holding more than 25% of its assets in cash, which is the highest percentage since 2004.
Another notable aspect of Berkshire's recent activity is its lack of purchases in Occidental Petroleum. Despite the stock's price falling below $60, Berkshire has not bought additional shares in recent months.
The overall message from Berkshire's actions is unclear. It could be a signal that Buffett and his team are concerned about the economy or specific sectors. Alternatively, it may be a strategic move to simplify the company's portfolio before Buffett's eventual departure.
Buffett has already donated tens of billions of dollars to charity and recently announced plans to create a new charitable trust for his remaining wealth. He expressed confidence in his children's values and their ability to manage the trust.
