Warren Buffett hasn’t said he’s bearish about stocks, but he’s certainly acting that way.
Berkshire Hathaway’s latest quarterly report shows its cash pile has risen from $276.9 billion to a record $325.2 billion. (Disclosure: I own shares in Berkshire.)
Berkshire now holds more cash than stocks. It offloaded $36.1 billion worth of stock in the third quarter and bought just $1.5 billion, making it the eighth consecutive quarter it has been a net seller.
Berkshire has sold most of its stake in Apple over the last year, reducing its position from $170 billion to $69.9 billion. Indeed, Buffett is increasingly hinting that Berkshire itself, up 26 per cent in 2024, is pricey: it didn’t buy back any of its own stock in the third quarter. In the second quarter, it repurchased just $345 million of stock. The contrast with previous years – repurchases topped $9.2 billion in 2023, $7.7 billion in 2022, and $27 billion in 2021 – is marked.
This doesn’t prove Buffett is bearish. Now 94, he may want to “clear the decks for his successors to remake Berkshire’s portfolio”, suggests DataTrek Research’s Nicholas Colas.
Still, the S&P 500 looks expensive, while Berkshire itself now trades on 1.6 times its book value, well above historical norms. As Colas notes, Buffett may well see stocks, including his own, as overvalued, “and therefore susceptible to a deep correction or outright bear market”.