Nov 03, V7N- Warren Buffett's Berkshire Hathaway significantly reduced its stock holdings in the third quarter, selling a substantial portion of its Apple and Bank of America shares, while increasing its cash reserves to a record $325.2 billion. This quarter marked Berkshire’s eighth consecutive period as a net seller, with stock sales totaling $36.1 billion but only $1.5 billion in purchases. The reduction in holdings included the sale of 100 million Apple shares, or about 25% of its Apple stake, though the tech giant remains Berkshire's largest stock position at $69.9 billion.
 
The company's growing cash position has raised questions among analysts about Buffett’s outlook on the stock market and the economy. Some speculate that he may view stocks as overvalued or anticipate an economic downturn, while others suggest he could be positioning for a major acquisition. Analyst Cathy Seifert from CFRA Research interprets Berkshire’s shift to cash as signaling a "risk-off" approach, reflecting broader economic caution.
 
Berkshire’s quarterly operating profit fell 6% to $10.09 billion, largely due to underwriting losses on older insurance policies, claims from Hurricane Helene, and currency impacts from a stronger U.S. dollar. Despite these losses, profitability improved in several divisions, including Geico, BNSF Railroad, and Berkshire Hathaway Energy. However, there was a notable 19% revenue drop at Pilot truck stops, likely due to declining fuel prices and marketing volumes, and a revenue slowdown in most of Berkshire's retail businesses.
 
Net income rebounded to $26.25 billion, reflecting significant unrealized gains in stock holdings like Apple. However, this figure remains volatile due to market fluctuations, which Buffett advises investors to disregard, instead focusing on operational performance.
 
Berkshire’s insurance business reported a 69% drop in underwriting profit, impacted by a large settlement from an older talc supplier bankruptcy and losses related to Hurricane Helene. It also projects $1.3 to $1.5 billion in pre-tax losses for the fourth quarter from Hurricane Milton.
 
In addition to its diversified industrial, real estate, and retail portfolio, Berkshire recently acquired the remaining 8% of Berkshire Hathaway Energy it did not already own. Buffett, now 94, has led the company since 1965, and eventual leadership is expected to transition to Vice Chairman Greg Abel, 62.
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