According to the latest company filing, Warren Buffett’s Berkshire Hathaway sold billions of dollars worth of its exposure in publicly listed equities. From January to March end, the US conglomerate sold about $13.3 billion worth of equities while adding only $2.9 billion to existing exposure, netting over $10 billion in sales. Buffett also allocated approximately $4.4 billion to repurchase shares of Berkshire itself.
Buffett and his longtime right-hand man, Charlie Munger, believe valuations are unappetizing, underscoring Berkshire’s struggle to put its mountain of cash to work. The company’s cash pile has risen by $2 billion since the start of this year to $130.6 billion, its highest level since the end of 2021. Last month, Munger said investors should reduce their expectations for stock market returns as the Federal Reserve raises interest rates and the economy slows.
Buffett sounded upbeat about the prospects for the firm he has overseen for the past 58 years and the broader economy, which has pushed through aggressive Fed rate hikes and a string of bank failures that have shaken faith in the banking system.
Buffett predicted earnings would fall at most of the company’s operations this year, but he did not paint a bleak picture of the economy. “It’s not that employment has plummeted or anything, but it’s a different climate than it was six months ago,” he explained. “A number of our managers were taken aback. Some had an excessive amount of inventory on order.”
Berkshire spends most of its $130.6 billion cash on short-term Treasury notes and bank deposits. The income from short-term bills and cash-like deposits increased to $1.1 billion, up from $164 million the previous year. Buffett declined to clarify whether it was reducing its stake in Activision Blizzard, which invested heavily after Microsoft agreed to buy the game producer.
Berkshire recorded a $35.5 billion profit in the first quarter, or $24,377 per class A share, partly due to a stock market surge that increased the value of its $328 billion portfolio of shares. Operating earnings — Buffett’s favourite success metric for Berkshire’s diversified array of operations increased 12.6% yearly to $8.1 billion.