Warren Buffett’s Berkshire Hathaway has raised its cash position relative to total assets in the June quarter to 25 percent, a level last seen in 2005.
Berkshire’s holdings in cash and cash equivalents reached a record $276.9 billion at the end of June amid a recent selling spree in Apple and BofA shares, in a sign that rising prices have impacted deal activity.
Berkshire disclosed on August 3 that it had trimmed its holding in Apple Inc. by nearly 50% and also pared stake in Bank of America trimming by 8.8% since July.
In May, during Berkshire’s AGM, Buffett had said he was not in a rush to buy more equity, “unless we think we’re doing something that has very little risk and can make us a lot of money.”
Berkshire’s June quarter shareholding revealed small stakes in cosmetics chain Ulta Beauty and aerospace company Heico.
The Kobeissi Letter asked a pertinent question on its social media handle X if Buffett was turning bearish, stating that Berkshire’s share of cash holding has more than doubled in just two years.
This raising of cash holding comes at a time when the risk of a US recession has been floating amid weak US employment indicators. One of factors that could explain Buffett’s sustained trimming of positions in key stocks could be that he is expecting higher corporate taxes going forward. “With present fiscal policies, I think something has to give. And I think higher taxes are quite likely,” Buffett had said during the Berkshire AGM in May 2024.
A relentless rally in US stocks – led by the magnificent seven pack of tech and AI plays on Wall Street – has sent the valuations higher, which is another factor that Buffett has cited in recent past.
