TLDR
- Berkshire Hathaway had approximately $318 billion in cash at the end of 2024, nearly double the amount from 2023
- Warren Buffett sold $134 billion in stocks during 2024, including two-thirds of Berkshire’s Apple stake
- Berkshire’s cash position is the largest of any U.S. company, with Alphabet holding $95 billion and Apple $141 billion
- Buffett has been a net seller of stocks for nine consecutive quarters while Wall Street remained bullish
- Berkshire’s Class A shares are up 9% this year while the S&P 500 is down 4%, demonstrating defensive characteristics
Berkshire Hathaway ended 2024 with about $318 billion in cash and equivalents, nearly twice what it had at the end of 2023. This massive cash reserve puts Warren Buffett’s company in a strong position during recent market turmoil.
The cash pile raises questions about whether Buffett will invest during the current market downturn. The S&P 500 has given up its gains since the election and is down 4% for the year.
Many blue-chip stocks have fallen 15% or more from their 52-week highs. This includes most of the Magnificent Seven stocks that led the market in 2023 and 2024.
Waiting for a deeper market correction
Buffett’s recent behavior suggests he might wait for a deeper market correction. The last time Berkshire bought stocks aggressively was in early 2022. At that time, the S&P 500 was 20% below current levels.
The 94-year-old CEO has taken a conservative approach to investing since 2020. He has built up Berkshire’s cash reserves for most of the past five years.
Berkshire was a net seller of $134 billion in stocks during 2024. This followed net sales of $34 billion in 2023. In contrast, the company was a net buyer of $34 billion in 2022.
Buffett sold about two-thirds of Berkshire’s Apple stake in 2024. This amounted to roughly 600 million shares at an estimated average price of $185. Apple now trades at $227.
Berkshire also sold over 30% of its Bank of America holdings last year. The average sale price was about $41, just above Monday’s closing price of nearly $40.
Investors will get more information on Berkshire’s investment activity when it reports first-quarter earnings in early May. The company’s balance sheet and earnings power have impressed investors.
Berkshire’s Class A shares have risen 9% this year. This performance is far better than the S&P 500’s 4% decline. The stock rose 0.3% on Monday to about $745,000, while the B shares gained 0.3% to $497.10.
The company’s operating profits after taxes jumped 70% in the fourth quarter to $14.5 billion. Yearly operating profits increased more than 25% to $47 billion.
Berkshire’s cash position dwarfs other major U.S. companies
Berkshire’s cash position dwarfs other major U.S. companies. Alphabet has $95 billion in cash offset by about $11 billion in debt. Apple holds $141 billion in cash with about $97 billion in debt.
Buffett has continued to be a net seller of stocks for nine consecutive quarters. This contrasts with Wall Street’s generally bullish outlook despite historically high market valuations.
Berkshire didn’t even buy back any of its own stock in the fourth quarter of 2024. This is unusual since the company had repurchased at least some shares in every previous quarter over the last five years.
Buffett seems to be following his famous investment philosophy: “We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” He appears to be waiting for better buying opportunities.
The Oracle of Omaha takes a much longer view than most Wall Street analysts. As he wrote to Berkshire shareholders: “Our horizon for such commitments is almost always far longer than a single year. In many, our thinking involves decades.”
With its enormous liquidity, Berkshire is well-positioned if market volatility continues. Buffett’s patience and long-term perspective may soon be rewarded if deeper discounts appear in the market.
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