Warren Buffett’s investment company, Berkshire Hathaway, announced in its first-quarter financial report for this year that it had reduced its Apple holdings by 13%. At the same time, its cash reserves reached $188.99 billion, a record high for the company. Buffett explained the reason for holding a large amount of cash reserves at the shareholders’ meeting on the 4th.
In the first quarter of 2024, Berkshire Hathaway reported revenue of $89.869 billion, a year-on-year increase of 5.2%, surpassing market expectations of $85.92 billion. Its net profit was $12.702 billion, a 64% decrease compared to the previous year, but still exceeding market expectations of $9.892 billion.
Notably, Berkshire Hathaway’s largest holding, Apple, decreased in value from $174.3 billion in the fourth quarter of last year to $135.4 billion in the first quarter of this year, with approximately 790 million shares. This represents a 13% reduction in holdings from the previous quarter (116 million shares). It is also the second consecutive quarter with a significant reduction in Apple holdings, following the sale of 10 million shares in the previous quarter.
However, this reduction in Apple holdings has led to an increase in Berkshire Hathaway’s cash reserves from $167.6 billion at the end of 2023 to the current $188.99 billion, setting a new record for the company.
Regarding the reduction in Apple holdings, Buffett stated at the shareholders’ meeting on the 4th that it was primarily for tax purposes. He mentioned the possibility of higher corporate income tax rates in the future to support the expanding US fiscal deficit. He also emphasized that Apple may still be Berkshire Hathaway’s largest holding because it is better than American Express and Coca-Cola.
Buffett further mentioned that Berkshire Hathaway’s cash reserves are expected to reach $200 billion by the end of June, as there are currently limited opportunities for targeted acquisitions. He explained that Berkshire Hathaway is willing to spend money, but only if the risks are extremely low and there is a potential for significant profits. The company is considering investments in Canada.
Buffett emphasized that holding such a large cash reserve in an increasingly complex world allows the company to act when opportunities arise. However, the continuously increasing cash reserve also highlights the company’s current inability to find suitable investment targets. It may even indicate their lack of optimism about the future investment market in the context of high interest rates and persistent inflation, leading to their decision to sell at a high point.
Furthermore, Buffett stated that Berkshire Hathaway’s main investments will always be in the United States. The company’s largest holdings, such as Coca-Cola and American Express, have business operations worldwide, and its investment in Japanese trading companies has also yielded returns, which Buffett is very satisfied with.
Overall, Buffett believes that if Berkshire Hathaway continues to invest in the domestic US market, it is unlikely to make significant mistakes.
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