By Jonathan Stempel
(Reuters) – Warren Buffett appears to have soured on stocks, letting cash at Berkshire Hathaway (NYSE:) soar to nearly $277 billion and selling a large chunk of its stake in Apple, even as the conglomerate posted a record quarterly operating profit.
Berkshire sold about 390 million Apple shares (NASDAQ:) in the second quarter, on top of 115 million shares from January to March, as Apple’s stock price rose 23%. It still owned about 400 million shares worth $84.2 billion as of June 30.
The cash stake grew to $276.9 billion from $189 billion three months earlier largely because Berkshire sold a net $75.5 billion of stocks. It was the seventh straight quarter Berkshire sold more stocks than it bought.
Second-quarter profit from Berkshire’s dozens of businesses rose 15% to $11.6 billion, or about $8,073 per Class A share, from $10.04 billion a year earlier.
Nearly half of that profit came from underwriting and investments in Berkshire’s insurance businesses.
Net income fell 15% to $30.34 billion from $35.91 billion a year earlier, as rising stock prices in both periods boosted the value of Berkshire’s investment portfolio, including Apple.
Buffett has long urged shareholders to ignore Berkshire’s quarterly investment gains and losses, which often lead to outsized net profits or net losses.
Berkshire often lets cash build up when it can’t find whole businesses or individual stocks to buy at fair prices.
Its cash may also signal concerns about the broader U.S. economy – many investors view Berkshire as a proxy for it.
Government data on Friday that showed slowing job growth and the highest unemployment rate since Oct. 2021 prompted some analysts to project multiple Federal Reserve rate cuts starting in September.
But Berkshire’s returns from short-term Treasuries should decline once rate cuts begin.
Berkshire is also using less cash to buy back its own stock, repurchasing just $345 million in the second quarter and none in the first three weeks of July.
“We’d love to spend it, but we won’t spend it unless we think we’re doing something that has very little risk and can make us a lot of money,” Buffett said at Berkshire’s May 4 annual meeting, referring to Berkshire’s cash.
Since mid-July, Berkshire has also sold more than $3.8 billion of shares in Bank of America, its second-largest stock holding.
Buffett remains a big Apple fan, reflecting the iPhone maker’s strong pricing power and committed customer base.
He said at the meeting that he expected Apple to remain Berkshire’s largest stock investment, but selling made sense because the 21% federal tax rate on the gains would likely grow.
Buffett, 93, has led Berkshire since 1965, building it into a conglomerate with dozens of businesses including Geico car insurance, the BNSF railroad, Berkshire Hathaway Energy, a namesake real estate brokerage, and Dairy Queen.
Vice Chairman Greg Abel, 62, is expected to eventually succeed Buffett as Berkshire’s chief executive.
