Additional Coverage:
- Warren Buffett resisted a last-gasp shopping spree in his final weeks as Berkshire Hathaway CEO (businessinsider.com)
Buffett’s Final Quarter at Berkshire: A Mountain of Cash and a Cautious Approach
OMAHA, NE – In his final quarter at the helm of Berkshire Hathaway, legendary investor Warren Buffett demonstrated his signature discipline, allowing the company’s cash reserves to balloon to a record-breaking $373 billion. This substantial increase came as Berkshire scaled back stock investments and refrained from share buybacks, signaling a continued struggle to find appealing opportunities in a high-priced market.
Buffett, renowned for his patient and value-driven approach, has long expressed a willingness to deploy capital when the right bargain presents itself. However, the latest fourth-quarter earnings report, released Saturday, indicates that such opportunities remained elusive through the end of 2023. This trend of caution has persisted for several years, with stocks near historical highs and fierce competition for acquisitions.
Berkshire Hathaway was a net seller of stocks for the thirteenth consecutive quarter in the three months ending December 31, a pattern that has held since the third quarter of 2022. Recent portfolio disclosures revealed a new, albeit small, stake in The New York Times Company, alongside reductions in key holdings like Apple and Bank of America, and a significant cut of 77% in a smaller Amazon position.
The company also notably abstained from stock buybacks for the sixth quarter in a row, a stark contrast to the approximately $17 billion in share repurchases made throughout 2022 and 2023. These strategic decisions contributed directly to the unprecedented growth of Berkshire’s cash and Treasury bill holdings, which, at December’s close, reached $373 billion after accounting for payables.
This monumental cash pile has nearly tripled in size over the past three years, from roughly $130 billion at the end of 2022. It now surpasses the market capitalization of several global corporate giants, including Bank of America, General Electric, and Coca-Cola.
Buffett’s retirement, announced unexpectedly last May, marked the end of a six-decade tenure during which he transformed Berkshire from a struggling textile manufacturer into a trillion-dollar conglomerate.
Greg Abel, Berkshire’s new CEO, addressed shareholders in his inaugural letter on Saturday, asserting that he would not hastily issue dividends or pursue deals solely to deploy the vast cash reserves. Abel faces the task of navigating a challenging financial landscape, as Berkshire’s operating earnings for the fourth quarter slumped 30% year-on-year to $10.2 billion. This decline was primarily attributed to a sharp drop in profits from its crucial insurance unit, despite stronger performance from BNSF Railway and the company’s manufacturing, service, and retailing divisions.