Warren Buffett’s $300 Billion Cash Stash: What’s Behind the Billionaire’s Record-Breaking Stock Sell-Off

Apple’s proportion has been reduced since the end of last year.
Additional 100 million shares sold in the third quarter alone
Build up ammunition without buying back shares

It was confirmed on the 2nd (local time) that Berkshire Hathaway, led by Warren Buffett (pictured), the ‘Sage of Omaha’, reduced its holdings in Apple by an additional 25% in the third and fourth quarters of this year. Following the 50% sale in the second and fourth quarters, Apple stocks were sold on a large scale again. Berkshire has been reducing its portion of Apple since the end of last year.

In addition, share buybacks were halted. Thanks to this, Berkshire’s cash holdings exceeded $300 billion for the first time in history.

Meanwhile, Berkshire’s after-tax operating profit was found to have decreased by 6% compared to a year ago.

Currently, 70% of the stock portfolio is concentrated in five companies, including Apple, Bank of America (BofA), Coca-Cola, and Chevron.

■Apple shares reduced by 25%

Berkshire confirmed that it sold 100 million shares of Apple stock in data released along with its third-quarter earnings announcement. As of the end of the third and fourth quarter, the size of Apple shares held has decreased to 300 million shares. As a result, Berkshire’s share of Apple has decreased significantly from 905 million shares at the beginning of the year to about one-third.

Berkshire has had a lot of fun with its investment in Apple.

Apple’s closing price on the 1st was $222.91, but Berkshire’s average purchase price per share was only $35. Berkshire mainly concentrated on buying Apple stocks between 2016 and 2018. Buffett appears to have continued to reduce his Apple holdings, considering that Apple’s proportion in Berkshire’s stock portfolio is too high.

Apple’s share, which was about 45% at the beginning of the year, fell to less than 25% at the end of the third and fourth quarters. Nevertheless, it is still the number one investment item with an overwhelming proportion. As of the end of September, Berkshire’s Apple stake was valued at approximately $69.9 billion, surpassing BofA’s stake of approximately $31.7 billion, which had been the second largest share.

■Highest cash holdings ever

Berkshire also suspended share repurchases in the third and fourth quarters. This suggests that Buffett judged that the stock market was running high. Berkshire’s cash holdings exceeded $300 billion for the first time by selling some of its stocks, including Apple, and suspending stock purchases. Berkshire’s cash holdings as of the end of September reached a record high of $325.2 billion (about 449 trillion won). Berkshire’s cash holdings surged 17.4% compared to $276.9 billion at the end of the second quarter. Berkshire not only sold 25% of Apple stock, but also sold more than $10 billion worth of BofA stock during the third and fourth quarters.

The stock sold by Berkshire in the third and fourth quarters amounted to $36.1 billion (approximately 49.8 trillion won).

Meanwhile, according to Berkshire’s third-quarter performance released today, after-tax operating profit decreased by 6% compared to the same period last year. It decreased from $10.8 billion a year ago to $10.1 billion in the third quarter of this year.

The money earned by Berkshire-affiliated companies, including auto insurance company Geico and railroad company Burlington Northern Santa Fe (BNSF), from their main businesses decreased by 6% compared to a year ago.

dympna@fnnews.com Reporter Song Kyung-jae

※ Copyright ⓒ Financial News, unauthorized reproduction and redistribution prohibited