Warren Buffett’s Berkshire Hathaway recently revealed its updated stock portfolio for the fourth quarter. The company trimmed its Bank of America investment and sold two major index funds, the Vanguard S&P 500 ETF and the SPDR S&P 500 ETF Trust. These sales add to a series of Berkshire stock sales.
The firm’s cash reserves swelled to $325 billion at the end of the third quarter from about $157 billion a year earlier. Based on the recent filings, this cash stockpile is expected to have increased even further. In addition to the sale of the S&P 500 ETFs, notable fourth-quarter sales included about $5.2 billion worth of Bank of America shares, $294 million of Capital One, $479 million of Brazilian fintech Nu Holdings, and $285 million of Charter Communications.
The rationale behind these ETF sales remains speculative.
Berkshire trims cash stockpile
Both ETFs are designed to track the long-term performance of the S&P 500 index, which hit several all-time highs in the fourth quarter of last year.
Various valuation metrics suggest the market is historically expensive. Despite these sales, it’s important to note the size of these investments relative to Berkshire’s overall portfolio. The Vanguard and SPDR S&P 500 ETFs holdings were worth about $23 million each, accounting for less than 0.02% of Berkshire’s stock portfolio.
These sales may not indicate Buffett’s broader market sentiment. Since the end of the third quarter, Berkshire Hathaway has also added to six different stock positions, investing significantly more than $23 million in these new opportunities. This activity suggests that while Buffett is taking some money off the table, he is not entirely bearish on the stock market.
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