Warren Buffett’s Berkshire Hathaway has been selling stocks and building up its cash reserves. The company’s latest 13F filing shows it cut its stake in Apple to about $70 billion at the end of September. This is down from nearly $175 billion at the start of the year.
Berkshire also sold roughly 235 million shares of Bank of America. The company was required to report these sales since it owned more than 10% of the lender. Berkshire’s cash pile has grown for nine straight quarters.
It reached a record $325.2 billion in the third quarter, up from $276.9 billion at the end of June.
Berkshire’s growing cash reserves
Of that amount, $288 billion is invested in short-term securities.
Investors closely watch Berkshire’s cash hoard as potential “dry powder” for future investments. However, Buffett may be keeping that powder dry because he doesn’t see much room for growth in the market. The ratio of market value to GDP, known as the “Buffett Indicator,” hit a record high of 198.1% last quarter.
Buffett has previously said that if this ratio approaches 200%, “you are playing with fire.”
In a 2001 article, Buffett wrote, “If the ratio approaches 200%—as it did in 1999 and a part of 2000—you are playing with fire.” The stock market’s total value reached a record high of $58.13 trillion on Monday. Despite the selloffs, Apple still represents about a quarter of Berkshire’s $266 billion equity portfolio. The company also added to its cash pile for a ninth consecutive quarter, bringing its cash on hand to a record level.
