Billionaire Warren Buffett Stockpiles Cash Ahead of Volatile Election
Warren Buffett dumped more Apple stock in the third financial quarter 2024, expanding Berkshire Hathaway’s cash on hand while reducing its stake in the tech giant to only one-third of what it held just two years ago.
Berkshire Hathaway, with the most expensive stock in the world priced at around $678,000 per share, held 915.6 million shares of Apple Inc. in January 2023, accounting for around $160 billion in value and 40 percent of the firm’s equity portfolio.
Buffett, 94, is the fifth-richest man in the world with an estimated net worth of $118 billion. He started selling off Apple stock in the second quarter of 2023 despite continually praising the company’s value.
FILE – Warren Buffett, Chairman and CEO of Berkshire Hathaway, speaks during a game of bridge after the annual Berkshire Hathaway shareholders meeting in Omaha, Neb., on May 5, 2019.
AP Photo/Nati Harnik, File
That continued into Q3 2024, during which time Buffett dumped around a quarter of its remaining Apple stock: Berkshire’s $160 billion stake in Apple had dropped to around $84.2 billion by the start of July 2024 and $69.9 billion by the end of Sept. 2024, according to the company’s financial releases.
Apple’s stock price has varied between $216.75 per share on July 1, 2024 and $233.00 per share on Sept. 30, 2024, hitting a max value of $234.82 per share on July 16 during that period.
In his 2022 letter to shareholders, an annual insight into the investing guru’s thinking and strategy, Buffett described Apple as one of the “four giants” of Berkshire’s portfolio, praising Apple CEO Tim Cook as “brilliant.”
“I don’t mind at all under current conditions, building the cash position,” Buffett said in 2022, according to the Financial Times. “I think when I look at the alternative of what’s available in the equity markets and I look at the composition of what’s going on in the world, we find it quite attractive.”
Prior to the 2021 supply chain crisis and the subsequent inflation spike, Berkshire Hathaway maintained around $150 billion in cash and cash equivalents in its portfolio. In the following years, due to the sale of Apple and other stocks, the firm’s cash on hand soared to over $325 billion – a record for the company.
Apple isn’t the only stock the firm sold, with Buffett authorizing the sale of $9 billion in Bank of America shares – one of the other giants in the company’s portfolio.
Some analysts noted that the sales followed another Berkshire Hathaway earnings shortfall, with operating profits below expectations. Buffett halted the buyback of the firm’s stock in an effort to boost the cash supply, and in combination with the sale of Apple and Bank of America stock led to the $48 billion cash supply swell in Q3.
However, that cash supply might come in handy after the Nov. 5 presidential election, with the markets jittery ahead of the tightly fought contest. Polling remains too close to call, with virtually every poll falling within the margin of error.
Buffett has said that he believes the federal government could raise taxes in the coming years to offset sustained budget deficits, making it necessary to sell some stock and receive higher profits, according to the Financial Times.
After-tax realized gains on sales this year have totaled around $76.5 billion, the Times reported.
Financial services firm Charles Schwab earlier this year conducted research on hypothetical investment under each president in the S&P 500 in 1948 and found that the strongest growth happened under a Democrat White House.
However, investors have speculated that under a second Trump administration, big spending in energy and aggressive tariff policies could lead to growth in the industrial and fossil fuel sectors, along with defense contractors due to a potentially bullish stance on military funding.
Tech stocks suffered heavy losses this week despite high profits, with Microsoft‘s stock dropping six percent and Meta dropping 3.6 percent even though both beat expectations on profits. Apple and Amazon also saw minor drops of around 1.3 percent, according to Fortune.
Some argued that the rapid growth made the tech stocks too expensive to continue buying, leading to a drop-off.
Buffett has led Berkshire Hathaway since 1965, but he is expected to hand over the reins to Vice Chairman Greg Abel at some point, according to the company’s plan of succession released following the death of Buffett’s long-time partner, Charlie Munger, in late 2023.
However, Buffett has shown no immediate signs of intending to step aside. The company remains robust, with a diverse portfolio covering everything from energy producers to insurance companies, candy makers and railroad operators.
Newsweek has emailed media contacts for Berkshire Hathaway and Apple on Saturday for comment.