Let the bears line up.
Industrial giant Berkshire Hathaway (Berkshire Hathaway) said in an earnings report released on Saturday that the company's cash reserves reached a new high of $189 billion in the first quarter.
Today, Buffett told shareholders at the crowded CHI Health Center that this huge cash reserve could reach $200 billion by the end of the quarter.
A veteran value investor said that so much dollar indicates Buffett is currently “bearish” on the stock market.
Buffett is bearish on the stock market. Bill Smead (Bill Smead), chief information officer of Smead Capital Management (Smead Capital Management), who has been watching Buffett for a long time, told me at the capitalist Woodstock music festival: “He increased his huge cash position to $200 billion, sold Apple (Apple) shares, and said he didn't think stocks were worth anything.”
Buffett said that considering the current macroeconomic environment, it is reasonable for Berkshire to decide to reduce Apple's holdings and increase the company's cash position.
“I don't think anyone here knows how to use it effectively, so we're not using it.” Buffett said in response to shareholders' questions about why Berkshire is not putting cash reserves to use.
Buffett added, “As the world gets more complicated and more complex, more and more things can go wrong”. You want to be able to “act when this happens.”
Apple and other Buffett shares
The bearers have meat to eat; this is Buffett's praise.
In the first three months of this year, Berkshire Hathaway reduced its Apple stock holdings by about 13%. This is the second consecutive quarter that the group has reduced its Apple stock holdings.
As of March 31, Apple accounted for about 40% of Berkshire's huge stock portfolio, with a total value of $135.4 billion.
Berkshire Hathaway has reduced its Apple stock holdings, and although its stock is still highly valued, the tech giant has been struggling in recent quarters. The stock fell about 10% in the first three months of this year, dragging down Berkshire's quarterly results.
Although some initially thought that Buffett's decision to reduce his Apple stock holdings indicated a change in his position on the tech giant, one analyst said, “There is no harm in reducing his holdings from the top.”
Gregory Warren (Gregory Warren), an analyst at Morningstar (Morningstar), told me at the conference: “This doesn't really worry us, because by the end of 2023, Apple has such a large share of the investment portfolio, so from a diversification perspective, any measure to reduce Apple's exposure is beneficial.”
The legendary investor also quickly reaffirmed his confidence in Apple to shareholders.
“By the end of this year, I think Apple will most likely become the largest common stock we currently hold,” Buffett told the family, including Apple CEO Tim Cook.
Buffett compared Apple to Berkshire's two best-known companies — Coca-Cola (Coca-Cola) and American Express (American Express). Although he called Coca Cola and American Express “amazing companies,” he pointed out that Apple is a “better company.”
Although Buffett remains optimistic about Apple, the company does face short-term resistance.
Its weakness in the Chinese market has always been the focus of attention of Apple investors, as the company's market share is being taken away by domestic companies. More cautious American consumers have not boosted investor confidence.
Christine Philpotts (Christine Philpotts), senior vice president of emerging markets equities at Ariel Investments (Ariel Investments), told me at Berkshire Hathaway's annual conference: “It's easy to blame the overall consumer environment, but other companies are becoming extremely competitive, and their market share is constantly changing.”
Since the beginning of this year, despite Apple's release of a series of artificial intelligence news, its stock price has fallen 4.8% cumulatively, far lower than the 8% increase in the S&P 500 Index.
Buffett's cash reserves suggest that other stocks may follow Apple's footsteps and fall over time.