Nov 4, 2024

Warren Buffett accumulates more than US$325 billion in cash after Berkshire Hathaway sells shares (REUTERS/Scott Morgan) Warren Buffett is now sitting on more than $325 billion in cash after selling billions of dollars worth of shares of Apple and the Bank of America this year, in addition to continuing to accumulate a steady stream of profits from all of its conglomerate’s various businesses, the Berkshire Hathawaywithout finding any major acquisitions. Berkshire said it sold about 100 million additional Apple shares in the third quarter after halving its massive investment in the computer maker. iPhone in the last quarter. The remaining stake, approximately 300 million shares, was valued at $69.9 billion at the end of September and remains Berkshire’s largest single investment, but has been drastically reduced since late last year, when it was worth $174. 3 billion. Investors will also be disappointed to learn that Berkshire didn’t repurchase any of its own shares in the quarter. Analyst Cathy Seifert of CFRA Research says shareholders will wonder why Buffett continues to accumulate so much cash. “Are they more pessimistic about the economic future and the market outlook than perhaps others are?” he says. Buffett said at the annual meeting in May that part of the reason he started selling some of his Apple shares is the expectation that tax rates will increase in the future. But Edward Jones analyst Jim Shanahan said he wonders if part of the reason Buffett started selling Apple was related to the death of Berkshire Hathaway Vice Chairman Charlie Munger last year, as the sales began soon after Munger’s death. Shanahan noted that Buffett was never as comfortable with technology companies as his longtime partner was. “If Charlie Munger were still alive, maybe he wouldn’t have sold the position so aggressively – maybe he wouldn’t have sold at all,” says the analyst. Berkshire reported Saturday that investment gains once again boosted its third-quarter profits to $26.25 billion, or $18,272 per Class A share. Last year, unrealized investment losses dragged down earnings from the Omaha, Nebraska-based conglomerate to a loss of $12.77 billion, or $8,824 per Class A share. Buffett has long recommended that investors pay closer attention to Berkshire’s operating profits if they want to get a good sense of how the businesses it owns are doing, as those numbers exclude investments. Berkshire’s bottom-line profit numbers can vary widely from quarter to quarter, along with the value of its investments, regardless of whether the company bought or sold anything. By that measure, Berkshire reported that its operating profits fell about 6% to $10.09 billion, or $7,023.01 per Class A share. That compares with $10.8 billion last year, or $7,437.15 per Class A share. The four analysts surveyed by FactSet Research predicted that Berkshire would post operating profits of $7,335.11 per Class A share. Berkshire’s revenue didn’t change much, coming in at $92.995 billion. Last year, it reported revenue of $93.21 billion. This number was ahead of the revenue forecast of US$92.231 billion made by three analysts consulted by FactSet. Berkshire owns a variety of insurance businesses, including Geico, as well as the BNSF railroad, several large utility companies, and a diverse collection of retail and manufacturing companies, including brands such as Dairy Queen and See’s Candy. One of Berkshire’s insurers, Guard, recorded some additional losses from previous years after managers reassessed their policies. Berkshire solved a mystery of the quarter by detailing how much it paid to acquire the remaining shares in its utilities business from the estate of former Berkshire board member Walter Scott. Berkshire said it paid $2.4 billion in cash, issued $600 million in debt and gave the Scott family Berkshire Class B shares worth just over $1 billion. Thus, the total compensation was about US$4 billion. That means the Scott family didn’t get as good a price for their 8% stake in the utilities as they did when Berkshire Vice Chairman Greg Abel sold his 1% stake in the utility business two years ago for $870 million. Abel is slated to succeed the 94-year-old Buffett as CEO in the event of his death. Source: Moneytimes