Warren Buffett Continues Three-Year Streak as Net Stock Seller
Berkshire Hathaway’s recent earnings report shows Warren Buffett’s ongoing trend as a net stock seller, marking the third consecutive year of such activity. In the latest quarter, the company sold $12.5 billion in stocks while purchasing $6.4 billion, representing 12 straight quarters of net selling.
Record Cash Reserves and Earnings Growth
As of the third quarter, Berkshire’s cash reserves climbed to a record $382 billion. This growth occurred alongside a strong 34% increase in operating earnings. Despite this success, Buffett has refrained from stock buybacks for five consecutive quarters.
Shift in Investment Strategy
Investments have shifted from stocks to Treasury debt in light of changing market conditions. However, Berkshire’s net investment income dropped to $3.2 billion, a decline of 13%. This cautious investment strategy began in 2022 when the Federal Reserve initiated significant rate hikes to combat inflation.
- Federal Reserve’s rate hikes led to lowered stock valuations.
- The market later experienced a rally spurred by AI-related company growth.
- Berkshire sold $3 billion in net stock in the previous quarter.
Buffett’s Transition and Future Moves
Since announcing his planned departure as CEO by year-end, Buffett has maintained a low profile regarding major investments. His successor, Greg Abel, is expected to take the reins while Buffett remains as chairman.
Significant Acquisition
On October 2, Berkshire entered into an agreement to purchase the chemical business of Occidental Petroleum for nearly $10 billion. This acquisition is noteworthy as it might be one of Buffett’s last major deals, enhancing Berkshire’s nearly 30% stake in Occidental.
Industry analysts, including Doug Leggate from Wolfe Research, view the deal as mutually beneficial. It not only strengthens Berkshire’s portfolio but also supports Occidental’s growth.
