As the market hits news records, Warren Buffett is currently building his cash balance at an unprecedented rate. Berkshire Hathway’s cash fortress swelled to a record $325.2 billion by the end of September, up from $276.9 billion in the second quarter, according to its earnings report released Saturday morning. It recently announced that they are freezing buybacks and holding $325 billion of cash.
Cash Balance Skyrockets!
Buffett’s cash balance has skyrocketed over the last 2 years. Interestingly, the cash balance is larger than the market cap of all but 27 public companies in the world. His cash pile is now larger than the market cap of Netflix and Bank of America.
A large contributor to the hop in this cash balance was Berkshire’s sales of Apple stock. In Q3 2024 alone, Berkshire sold another $14.3 billion of AAPL bringing their position down to $69.9 billion.
Warren Buffett has sold $100 billion of $AAPL over the last 2 quarters. And Interestingly, this comes at a time when the market is on an unprecedented run. The rally has also put the S&P 500 officially up +40% over the last 12 months.
No buybacks
Berkshire didn’t repurchase any company shares during the period amid the selling spree. Repurchase activity had already slowed down earlier in the year as Berkshire shares outperformed the broader market to hit record highs.
Notably, Berkshire Hathaway repurchased $0 of stock in Q3 2024. This compares to $345 million in Q2 2023 and $2 billion in each of the 2 previous quarters. Berkshire has said that it will buy back stock when Buffett “believes that the repurchase price is below Berkshire’s intrinsic value.”
Class A shares of Berkshire have gained 25% this year, outpacing the S&P 500′s 20.1% year-to-date return. The conglomerate crossed a $1 trillion market cap milestone in the third quarter when it hit an all-time high.
Buffet De-risking The Balance Sheet?
It appears that Buffet is de-risking Berkshire Hathaway’s balance sheet. Apart from liquidating holdings, he has also increased the holdings of T-Bills to $288 billion.
Buffett may be reflecting on the elevated levels of greed in the market. A famous quote of his says – “be fearful when others are greedy, and be greedy when others are fearful.”
The last time Buffett trimmed his holdings of Apple, AAPL stock fell nearly 6%. There could be a downward pressure on the stock on Monday which could weigh on the entire market.
Growing Institutional Adoption
In the second quarter of 2024, the number of institutional investors holding Bitcoin exchange-traded funds (ETFs) increased by 14% to 1,100. This is the fastest rate of adoption for any ETF in history.
While Buffett remains a persistent critic of Bitcoin, claiming that BTC is going nowhere, however, last year, Bitcoin stunned the financial world by surpassing Berkshire Hathaway by the size of its market capitalization and leaving it far behind.
Will Buffet Soon Change His Stance Towards BTC?
The Microstrategy CEO, Michael Saylor in an earlier tweet hinted that Warren Buffett should consider following in the footsteps of MicroStrategy. Microstrategy has been steadily buying BTC since August 2020 and is the largest corporate holder of Bitcoin.
Despite Buffet maintaining his critical viewpoint on cryptocurrencies, Berkshire Hathaway has reaped significant gains via its stake in Nu Holdings. Initially investing $500 million in a Series G funding round and an additional $250 million later, Berkshire’s involvement has paid off.
The company’s performance has been impressive, with a 100% market surge in 2023 and another 50% rise in early 2024. This investment success has put Buffett in a tricky position, as Nu Holdings’ performance, up nearly 125% this year, is sharply contrasting with his negative stance on Bitcoin. Meanwhile, Bitcoin itself is having a remarkable year in 2024, significantly outperforming indices like the S&P 500.
What do you think is coming next? Will Warren Buffet follow the footsteps of institutions turning to Bitcoin over its remarkable performance and appeal? Stay tuned to know more.
