Buffett sells more shares, freezes buybacks, Berkshire Hathaway’s cash fortress tops $300 billion | Wilnesh News

Berkshire HathawayThe company’s massive cash pile topped $300 billion in the third quarter as Warren Buffett went on a stock-selling spree and stopped buying back shares.

The Omaha-based conglomerate’s cash pile grew to a record $325.2 billion at the end of September, up from $276.9 billion in the second quarter, according to an earnings report released Saturday morning.

The mountain of cash continues to grow as the Oracle of Omaha sells a majority of its holdings, i.e. apple and Bank of America. Berkshire sold about a quarter of its giant Apple stake in the third quarter, marking the fourth straight quarter the company has scaled back that bet. Meanwhile, Berkshire has made more than $10 billion since mid-July from the sale of its long-term investment in Bank of America.

Overall, the 94-year-old investor remains in a selling mood as Berkshire sold $36.1 billion worth of stock in the third quarter.

No repurchase

Berkshire did not repurchase any company stock during the sell-off. Buyback activity had slowed earlier this year as Berkshire shares outperformed the market and hit record highs.

The group repurchased only US$345 million worth of its own shares in the second quarter, far below the US$2 billion repurchased in each of the previous two quarters. The company said it will repurchase shares when Chairman Buffett “believes that the repurchase price is less than conservatively determined intrinsic value of Berkshire Hathaway.”

Berkshire Hathaway shares are up 25% this year, beating the S&P 500’s year-to-date return of 20.1%. The group’s market capitalization exceeded the US$1 trillion milestone in the third quarter, setting a record high.

In the third quarter, Berkshire’s operating profit (including profits from the group’s wholly-owned businesses) totaled US$10.1 billion, down approximately 6% from the same period last year due to weak insurance underwriting. The figure was slightly lower than analysts’ estimates, according to the FactSet consensus.

Buffett’s conservative stance comes as stocks have surged higher this year on expectations that the economy will land smoothly as inflation falls and the Federal Reserve continues to cut interest rates. However, rates haven’t quite fallen in line recently, with the 10-year Treasury yield climbing back above 4% last month.

Prominent investors such as Paul Tudor Jones are concerned about the ballooning fiscal deficit, and neither presidential candidate in next week’s election will cut spending to address the problem. Buffett has signaled this year that he will sell some of his shares because he believes capital gains tax rates must be raised at some point to curb growing deficits.