"Clearance-style" selling of Apple and Bank of America, not repurchasing and hoarding cash! Is Buffett "voting with his feet" on U.S. stocks?

Investment legend Warren Buffett is launching a shocking "liquidation-style" sell-off that is shaking the market.

Following a nearly 50% reduction in the second quarter, Berkshire Hathaway has again reduced its Apple stock by 25% in the third quarter, selling 100 million shares and holding only 300 million shares. Since the beginning of the year, its Apple holdings have plummeted from 905 million shares to 300 million shares, a decrease of 67%. Although Apple remains its largest holding, the market value has dropped from $174.3 billion at the beginning of the year to $69.9 billion.

Buffett's "sell-off offensive" goes far beyond this. In the third quarter, Berkshire net sold $34.6 billion in stocks, marking the eighth consecutive quarter as a net seller of stocks. The stake in Bank of America was also reduced by 23% to 799 million shares. More notably, the company suspended its stock buybacks for the first time since 2018 this quarter.

Amid continuous sell-offs, Berkshire's cash reserves soared to a historic high of $325.2 billion, a significant increase from the $168 billion reserves at the beginning of the year. In stark contrast to the 2008 financial crisis when he urged to "buy U.S. stocks," the 94-year-old "Oracle of Omaha" seems to be signaling concerns about the current U.S. stock market through his actions.

While Buffett attributed part of the sell-off in May to concerns over potential increases in capital gains tax rates, such a large-scale cash-out, combined with a sharp decline in interest in the overall market, including his own stocks, may indicate that this investment master is becoming more cautious about U.S. stocks.

Apple's $100 Billion Sell-Off!

According to Berkshire Hathaway's latest third-quarter financial report, the company significantly sold off about 100 million shares of Apple stock, reducing its holdings to 300 million shares.

In terms of holdings, since the beginning of 2024, Berkshire has drastically reduced its holdings from 905 million shares to 300 million shares, a decrease of as much as 67%.

From a market value perspective, as of September 30, the company held only $69.9 billion in Apple stock, down from $84.2 billion on June 30, a 62% decline from $135.4 billion on March 31, and a 70% drop from $174.3 billion on December 31, 2023.

It is worth mentioning that most of these Apple shares were purchased between 2016 and 2018 at an average price of $35. As of last Friday's close, Apple's stock price was $222.91.

Berkshire stated that the investment gains realized in the first three quarters of 2024 amounted to $76.5 billion, most of which were related to Apple.

Holding Cash, No Buybacks!

Berkshire's sell-off offensive is not limited to just AppleThe financial report shows that in the third quarter, the company had a net sale of stocks amounting to $34.6 billion, marking the eighth consecutive quarter as a net seller of stocks.

During the same period, the company's holdings in Bank of America were reduced from 1.033 billion shares to 799 million shares, a decrease of 23%. As a result, Bank of America stock dropped from the second largest holding to third place, surpassed by American Express (with a market value of approximately $42 billion). In contrast, the company's holdings in American Express, Coca-Cola, and Chevron remained relatively stable.

More notably, Berkshire Hathaway suspended its stock repurchase plan in the third quarter for the first time since changing its buyback policy in 2018. This move seems to indicate that even for its own stock, Buffett believes the current price is not attractive.

Amid continued reductions, Berkshire's cash reserves reached a historic high. As of the end of the third quarter, the company's cash reserves soared to $325.2 billion, a significant increase from $168 billion at the beginning of the year.

Although Buffett attributed part of the reduction to concerns about the U.S. government potentially raising capital gains tax rates during the shareholder meeting in May, such a large-scale "liquidation" operation seems to suggest a more cautious attitude towards current market valuations.

From an operational performance perspective, Berkshire achieved an operating profit of $10.09 billion in the third quarter, down 6% from $10.76 billion in the same period last year. The decline in profit was mainly affected by a significant drop in underwriting income from the insurance business and an $1.1 billion foreign exchange loss.

Specifically, insurance underwriting profit fell by 69% year-on-year, partly due to a $565 million loss from Hurricane Helen and a court settlement related to a bankrupt talc supplier. However, its auto insurance company GEICO performed well, doubling its underwriting profit. The profitability of the railroad and energy businesses also improved.

It is worth noting that the 94-year-old "Oracle of Omaha" stated in May this year that he is not in a hurry to invest unless he can find investment opportunities with extremely low risk and considerable returns. His statement contrasts sharply with his stance during the 2008 financial crisis when he urged to "buy U.S. stocks."

It is worth mentioning that if we use the Buffett Indicator (the ratio of total stock market capitalization to GDP) as a measure, the current U.S. stock market is indeed not cheap.