Line up the bears.
Berkshire Hathaway's (BRK-A, BRK-B) cash pile hit another all-time high in the first quarter at $189 billion, the industrial giant announced in its earnings call on Saturday.
Buffett told shareholders today at a packed CHI Health Center that his massive war chest will likely reach $200 billion by the end of this quarter.
According to one veteran value investor, this level of dollar buying shows that Buffett is “bearish” on the stock market at the moment.
“Mr. Buffett is bearish on the stock market. He has shown this by increasing his massive cash position to $200 billion, selling Apple stock, and saying he sees no bargains.” Bill Smead, CIO of Smead Capital Management and a longtime Buffett watcher, told me at Woodstock. of capitalism.
Berkshire's decision to reduce its stake in Apple and increase the company's cash position is a logical move given the current macroeconomic environment, Buffett said.
In response to a shareholder's question about why Berkshire isn't using its cash reserves, Buffett said, “I don't think anyone sitting at this table knows how to effectively utilize their cash. “I will not use it,” he said. .
“As the world becomes more sophisticated, more complex, and more things can go wrong, the chances of things going wrong are increasing,'' Buffett said, adding, “I want to be able to act when that happens.''
Apple and other Buffett stocks
Buffett praises the bears for their delicious meat.
Berkshire cut its stake in Apple by about 13% in the first three months of this year, marking the second consecutive quarter that the conglomerate has reduced its stake in the iPhone maker.
As of March 31, Apple accounted for about 40% of Berkshire's vast stock portfolio, valued at $135.4 billion.
Berkshire has reduced its position in Apple as the tech giant has struggled in recent quarters and the stock's valuation remains elevated. The stock price fell about 10% in the first three months of the year, weighing on Berkshire's quarterly results.
While some initially saw Buffett's decision to reduce his stake in Apple as a sign of a change in his stance on tech companies, one analyst told Yahoo Finance: “We're a little off the top. That doesn't matter,” he said.
“This is less of a concern to us because Apple had a very large position in the 13-F portfolio at the end of 2023, so we are looking to reduce that exposure,” Morningstar analyst Gregory Warren said. That's good from a diversification standpoint,” Morningstar analyst Gregory Warren told me. meeting.
The legendary investor was also quick to reassure shareholders about his faith in Apple.
“At the end of the year, I think it's very likely that Apple will be the largest common stock that we currently own,” Buffett told a packed audience that included Apple CEO Tim Cook. ” he said.
Buffett compared Apple to two of Berkshire's most famous top holdings, Coca-Cola (KO) and American Express (AXP). He called Coca-Cola and American Express “great businesses,” but pointed to Apple as “an even better business.”
Buffett remains optimistic about Apple, but the business faces short-term headwinds.
China's weakness has become a major focus for Apple investors as Apple loses market share to domestic companies. Investor sentiment has also not been helped by the fact that US consumers have become more cautious.
“It's easy to blame the overall consumer environment, but Huawei and other companies have become very competitive, and we're seeing shifts in market share,” said Ariel Investments, senior vice president of emerging market equities. President Christine Philpotts told me at Berkshire's annual meeting.
This trend is likely to accelerate as domestic companies continue to “elevate their value proposition,” Philpotts said.
Despite the planned AI announcement, Apple shares are down 4.8% since the beginning of the year, well below the S&P 500's 8% rise.
Buffett's wealth suggests other stocks could follow Apple's decline as the year progresses.
Want to know what Apple is up to when it comes to the AI race? Yahoo Finance Executive Editor Brian Sozzi breaks down Amazon's AI plans with AWS CEO Adam Selipsky in a new episode of the Open Bid podcast below. Masu.
sheena smith Anchor of Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Have a tip about a deal, merger, activist situation, or more? Email seanasmith@yahooinc.com.
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