Warren Buffett’s Berkshire Hathaway has reached an all-time cash reserve high of $325.2 billion, a historic level achieved through major shifts in its stock portfolio, particularly its Apple holdings. The conglomerate began reducing its Apple shares late last year, accelerating its selling pace through the first half of 2024. By the end of the second quarter, Berkshire had halved its initial 2016 Apple investment, reducing its stake from 400 million to 300 million shares, and recently cut it by an additional 100 million shares by the close of the third quarter.
Despite these sales, Apple remains Berkshire’s largest holding, valued at nearly $70 billion. However, this is a significant decrease from its peak value of $178 billion, showing that Berkshire has shed more than two-thirds of its Apple position over the last year. In tandem, Berkshire’s overall cash balance has grown, with its cash and short-term treasury holdings now exceeding the market value of its equities, which stood at $271.6 billion as of the end of the third quarter.
This aggressive paring down of Apple stock and other equities aligns with Buffett’s broader moves to reduce Berkshire’s equity exposure. For the eighth consecutive quarter, Berkshire was a net seller of stocks, adding only $1.5 billion in new equity investments in the third quarter. While some investors have questioned this trend, Berkshire’s stock has continued to perform well, up 52% over the past three years, significantly outpacing the S&P 500’s 22% increase.
Buffett has cited potential increases in the capital gains tax rate as a factor behind Berkshire’s shift toward liquidity, suggesting the change could help address the federal deficit, now around 122% of GDP. “With present fiscal policies, I think higher taxes are quite likely,” Buffett commented during Berkshire’s annual shareholder meeting in May.
Looking ahead, political candidates hold differing views on corporate tax rates. Vice President Kamala Harris has indicated a plan to increase the rate to 28% if elected president, while former President Donald Trump has proposed reducing it to 15% for U.S.-based manufacturing companies.
While Buffett has committed to retaining Apple as Berkshire’s largest investment, he remains focused on building cash reserves in response to current economic and market conditions. “Under current conditions, building the cash position is quite attractive,” he remarked, acknowledging that while a tax hike on capital gains may be on the horizon, he isn’t particularly concerned.
