Berkshire Hathaway, led by Warren Buffett, has been divesting from its Apple stock while simultaneously boosting its cash holdings. The company now boasts a cash reserve that has reached an unprecedented total of $325.2 billion. Buffett began to diminish Berkshire’s investment in Apple towards the end of the previous year.
By the conclusion of the second quarter, Berkshire had reduced its Apple ownership from 400 million shares to 300 million. Sales of Apple stocks persisted throughout the third quarter. Despite these reductions, Apple remains the largest asset in Berkshire’s portfolio, carrying a valuation of $69.9 billion.
At its peak, Apple’s worth represented $178 billion of the overall portfolio. Over the last two years, Buffett has been progressively scaling back his stock investments. In the third quarter, the total new stock purchases made by Berkshire amounted to just $1.5 billion.
For eight consecutive quarters, the company has been a net seller of stocks. This trend means that the value of Berkshire’s cash and short-term treasury holdings now exceeds that of its stock investments.
Berkshire increases cash reserves amid market changes
The total value of stocks held by Berkshire was reported as $271.6 billion at the end of the third quarter. Some market participants have raised concerns regarding this strategy. Nevertheless, Berkshire’s stock performance has been strong over the past three years, achieving a 52% increase, in contrast to the S&P 500, which saw only a 22% rise.
Buffett anticipates an increase in capital-gains taxes as a means to address the federal deficit. “With the current fiscal policies, I believe something must change, and higher taxes seem quite probable,” he expressed during Berkshire’s annual meeting in May. Vice President Kamala Harris has suggested increasing the corporate tax rate from 21% to 28% should she assume the presidency.
In contrast, former President Donald Trump has proposed reducing this tax rate. Buffett affirmed that Apple will continue to be Berkshire’s most significant investment, yet he values maintaining cash reserves in today’s market environment.
“I don’t mind at all, given the current circumstances, increasing our cash holdings,” he pointed out. While Buffett anticipates a rise in capital-gains taxes, he remains unconcerned. “At Berkshire, we always hope to contribute significantly to federal income taxes; we believe it is the right thing to do,” he stated.
