Like an implacable child at the candy store, Warren Buffett, the legendary chair of multinational conglomerate Berkshire Hathaway Inc (NYSE:BRK.B), sees little of fancy on the stock market in 2024.
Cash and cash equivalents across Berkshire’s two main reporting segments, namely ‘insurance and other’ and ‘railroad, utilities and energy’, plus restricted cash held in other assets, totalled $43 billion as of 30 June.
Combined with liquid short-term Treasury bills valued at $234.5 billion, Berkshire’s cash reserve was in the $277 billion ballpark at the end of the six-month period, per the firm’s latest financials.
Berkshire’s stockpile of short-term T-bills increased from $129.6 billion at the end of 2023; this was largely funded by the sale of more than $97 billion in equities throughout the six months to 30 June, predominantly Apple stock.
It represents a significant ramping up of share disposals at Berkshire. For context, Berkshire sold ‘just’ $26 billion worth of equity securities in the same period in 2023.
But it also suggests that little has changed in Buffet’s mind over the past 12 months.
This time last year, Buffett said he would continue to grow Berkshire’s T-bills holdings for lack of attractive investment opportunities.
The suggestion was, it’s better to hold cash than buy businesses just for the hell of it, thus implying that there was nothing decent to buy at the time.
Given Buffett’s persistent Scrooge McDuck approach to holding cash, it’s safe to say little has changed.
Some of this cash has gone to share repurchases- roughly $345 million in the second quarter and $2.3 billion in the first quarter, per Berkshire’s 10Q filings with the Securities and Exchange Commission.
But the real question is, when will the floodgates open once again? Perhaps soon, if the global equity sell-off continues to gather momentum.
Mounting fears of a US recession, coupled with a subjectively mixed bag of a tech earnings season, is beginning to weigh heavy on the stock market.
Wall Street is poised for a meltdown when trading commences today, as valuations undergo a massive repricing.
Japan’s Nikkei 225 index saw its biggest one-day drop since 1987. Things are not much better in London.
Tech stocks are leading to charge lower and while this isn’t always Buffett’s preferred sector to invest in, it’s inevitably where most of the blood will be shed.
Buffett is a contrarian investor after all. "Be fearful when others are greedy, and greedy when others are fearful," as his famous quote goes.
There is certainly a lot of fear right now, in the tech sector or otherwise.