Warren Buffett’s Berkshire Hathaway made some notable moves in the third quarter of 2022. While Wall Street analysts disagreed with most of Buffett’s recent trades, they seemed to view one of his Q3 decisions as especially smart. Buffett sold more stocks than he bought in the quarter.
Analysts don’t appear to support his decision to sell another 100 million shares of Apple. The majority of analysts surveyed in November rate the iPhone maker as a “buy” or “strong buy.” They also don’t agree with Buffett’s sales of Ulta Beauty. However, analysts generally aligned with a few of Buffett’s Q3 moves.
This was primarily with the stocks he bought rather than sold. Berkshire increased its position in SiriusXM Holdings, and analysts favor this decision. The average price target for SiriusXM reflects an upside potential of around 8%.
Analysts also liked Buffett’s purchase of Domino’s Pizza. He bought almost 1.28 million shares in Q3. The consensus price target is nearly 2.5% above Domino’s current share price.
But Buffett’s smartest move in Q3, according to Wall Street, appears to have been his exit from Floor & Decor Holdings.
Buffett’s strategic cash reserve expansion
Buffett sold all 3.98 million shares of the specialty retailer.
Many analysts think this was a prudent move. The average price target for Floor & Decor is almost 13% below the current share price. Only seven of the 26 analysts surveyed in November recommended buying the stock.
Although Wall Street might view the Floor & Decor exit as Buffett’s smartest Q3 move, another action by the legendary investor might have been even smarter. It involved boosting Berkshire’s cash stockpile. The conglomerate had a whopping $325.2 billion in cash and short-term investments at the end of Q3.
Hoarding so much cash could prove to be smart. As a value investor, Buffett isn’t finding many stocks that meet his stringent buying criteria right now. Increasing his cash position aligns with his investing philosophy.
At some point, more stocks will likely be available at attractive prices. Buffett will then be ready to invest heavily. Building Berkshire’s cash position to a record high could one day look absolutely brilliant in hindsight.
The strategic move might turn out to be Buffett’s smartest in Q3.
