Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) Founder and CEO Warren Buffett is rightly regarded as one of the greatest investors of all time. The so-called “Oracle of Omaha” has run the company for nearly 60 years, nearly doubling its average annual earnings. S&P 500 During that period.
The power of compound interest has allowed Berkshire to dominate the S&P 500 throughout its history. $1,000 invested in Berkshire in 1964 would be worth more than $40 million today. Even better, Buffett’s success has made millions of people rich right along with him, especially those who invested early in his conglomerate.
Buffett’s first quarter buys and sells
Buffett’s success, fame and willingness to share his wisdom have investors big and small following him closely — Berkshire Hathaway reports the stocks it buys and sells each quarter in its 13-F report — so you might be surprised to learn what his company was doing even as the stock market hit record highs in the first quarter.
Berkshire Hathaway bought three stocks in the first quarter. The chart below shows how many shares the Buffett conglomerate bought and for how much.
|
stock |
Purchased shares |
Purchase price at the end of the first quarter |
|---|---|---|
|
Chub |
5,823,840 |
$1,509,131,659 |
|
Liberty SiriusXM Radio |
26,794,606 |
$796,067,744 |
|
Occidental Petroleum |
4,302,324 |
$279,608,037 |
Source: Whalewisdom and Yahoo! Finance
Berkshire spent about $2.6 billion on stock purchases in the first quarter, with the bulk of that going to insurance giant Chubb, which was revealed to be Berkshire’s first mystery stock purchase in the third quarter of 2023. Buffett is a longtime fan of the insurance industry, so his purchase of a top company shouldn’t come as much of a surprise.
The other two stocks Berkshire bought were additions to its existing holdings and are in two sectors that Buffett has historically favored: media and energy.
Berkshire also sold six stocks during the quarter.
|
stock |
Sold shares |
Selling price at the end of the first quarter |
|---|---|---|
|
apple |
116,191,550 |
$19,897,780,937 |
|
Paramount Global |
55,790,726 |
$656,656,845 |
|
home page |
22,852,715 |
$690,609,047 |
|
SiriusXM Radio |
3,561,146 |
$13,674,801 |
|
Chevron |
3,113,119 |
$486,114,663 |
|
Louisiana Pacific |
446,962 |
$37,397,310 |
Source: Whalewisdom and Yahoo! Finance
As you can see from the chart above, Berkshire Hathaway has sold over $21 billion in stock, most of which was in Apple, Berkshire Hathaway’s largest holding.
in CNBC In the interview, Buffett suggested that the main reason for selling Apple shares was for tax reasons, since Berkshire has significant capital gains and capital gains tax rates may soon rise, but there may be other reasons for Berkshire selling Apple as well.
Buffett’s Hidden Warning to the Stock Market
As the numbers show, Berkshire Hathaway significantly reduced its exposure to the stock market in the first quarter, selling about $14 billion in net stock, or about 4% of its total equity investments.
Buffett has previously said that he is a “net buyer of stocks for the long term,” meaning he plans to buy more stocks rather than sell them, and he often says he wants stock prices to fall.
But by selling shares in the first quarter, Buffett is sending the opposite signal: He believes stocks are overvalued and may now want to get out and reduce his exposure to his stock holdings.
What it means for investors
Even if you’re a big Buffett fan, blindly following his lead is probably not the best strategy for you — after all, different investors have different goals, and Buffett, who runs a company worth nearly $1 trillion, likely believes it’s worth sacrificing some of the upside potential of Apple shares to avoid the risk of rising capital gains tax rates.
You probably have different priorities when it comes to investing, and if most of your investments are in retirement accounts, you don’t need to worry about capital gains.
But Buffett has occasionally complained that stocks are overvalued, and with the S&P 500 back at all-time highs despite lingering fears of a recession, it’s not surprising he feels the same way. The Berkshire CEO famously stayed out of the dot-com boom, a view that was proven correct when it burst. Some investors believe AI stocks are creating a similar bubble in today’s market.
It’s also worth noting that Buffett didn’t invest his Apple proceeds in an S&P 500 ETF or similar investment. Instead, Berkshire appears to have put the money into Treasury bonds, increasing its Treasury holdings by $24 billion to $153.4 billion.
It’s unclear whether Buffett thinks stocks are overvalued, but his decision to put his money in government bonds instead of stocks is indicative. So far, stocks have continued to rise in the second quarter. Buffett isn’t always right, but followers of the Oracle of Omaha shouldn’t ignore his reluctance to buy new stocks, as it could be a sign that stocks are getting too expensive.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple, Berkshire Hathaway, Chevron, and HP. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
Has Warren Buffett sent a warning signal to the stock market? What his actions mean for you. This was originally published by The Motley Fool.
