Warren Buffett has made perplexing moves in the past few months, and many are asking what is going on at Buffett’s Berkshire Hathaway, with assets under management of USD 1.108 Trillion as of June 2024.
“Warren Buffett added to his cash pile in Q2 a record $88 billion, sending Berkshire’s cash mountain to an all-time high of $277 billion in June,” written in a piece entitled, “Warren Buffett Added To His Cash Pile,” posted in August.
Warren Buffett has made perplexing moves, one of them being the selling of nearly $10 billion worth of Bank of America stock
It is a curious move, bearing in mind the Fed started its rate-cutting cycle in September with a 50 basis points cut.
All the major Western-aligned central banks, including The People’s Bank of China, have all started their loosening cycles. So, why is Buffett’s Berkshire Hathaway unloading Bank of America stocks?
To make matters even more curious, Warren Buffett has not explained, albeit publicly, the reason for dumping bank stocks and hoarding a record-high cash mountain.
“Warren Buffett has made perplexing moves, one of them being the selling of nearly $10 billion worth of Bank of America stock”
WEALTH TRAINING COMPANY
Does Warren Buffett know something we don’t?
In the last few months, the “Oracle of Omaha” has directed his firm to dump almost $10 billion of one of its largest holdings and a popular stock among institutional investors.
The sales come as Berkshire sits on the greatest pile of cash it’s ever kept on the books.
Warren Buffett’s investment strategy has remained relatively consistent over the decades, centring around the principle of value investing.
His approach entails finding undervalued companies with strong potential for growth and investing in them for the long term. He made a career of patient, disciplined investing, focusing on backing great companies for the long haul rather than picking great stocks.
In short, Warren Buffett is a patient value investor with a long investment timeline. “When you find a truly wonderful business, stick with it. Patience pays,” said Warren Buffett.
“When you find a truly wonderful business, stick with it. Patience pays”
WARREN BUFFETT
Warren Buffett’s investment philosophy made him the sixth wealthiest person on the planet with an estimated personal net wealth of $133 billion (2024). He has grown his wealth by over $30 billion since 2021,
But, admixed all the selling, Warren Buffett was also a curious large stock purchase, of just one stock.
“Amongst all the selling, Warren Buffett earmarked his stock Berkshire Hathaway in 2024 for a total $3 billion purchase” – Wealth Training Company
Warren Buffett has made perplexing moves with a $3 billion stock purchase
Amongst all the selling, Warren Buffett earmarked his stock Berkshire Hathaway in 2024 for a total $3 billion purchase.
So, he is inflating the price of his stock not by brilliant value investing but by simply using capital to buy his stock.
It is the infamous stock buyback pump powered by central bank money creation, which has added an extra $30 billion since 2021 to its wealth.
This is how the system transitions towards a neo-feudal society with no middle class. The 99% of people who survive on wages or fixed income are left holding a rapidly diluted currency, a hand-to-mouth existence, and renting where the dream of owning their home is a distant memory.
One hundred years ago, a bank clerk would live in a Victorian house in London, and the mews were for stables and carriages.
Today, a top working young professional would be lucky if they could purchase a mews without the help of family.
Today, the consumption of luxury goods by the middle class has collapsed, and at this rate, owning a car could soon be the privilege of the wealthy.
“If you invested $1,000 into Berkshire five years ago, today, your investment would be worth more than $2,300, a 132% gain” – Wealth Training Company
Back to the theme, Warren Buffett has made perplexing moves by selling his $40 billion stake in Bank of America.
In 2021, he paid $5 billion for preferred stock and warrants to buy an additional 700 million shares at just over $7 per share before 2021.
Despite the state of the bank at the time, Warren Buffett bet that the bank would be on the receiving end for a wave of central bank liquidity during the 2020 lockdowns.
Fortunately for Buffett, his bet paid off, and he exercised the warrants six years later for an on-paper profit of $12 billion.
Buffett was a net buyer of Bank of America until 2024 when he began selling chunks of his firm’s more than $40 billion stake.
Perhaps Buffett’s sale of Bank of America was just profit-taking.
When the sales began in July, the bank’s stock price took a hit, but despite Berkshire’s continued offloading, shares are up nearly 9% since its low after the sales began.
Warren Buffett has made perplexing moves shedding, Apple stock as well
In his 2023 shareholder letter, he said, that “markets now exhibit far more casino-like behaviour than they did when he was young.”
A casino based on front-loading central bank liquidity?
So Warren Buffett is selling stocks in two great companies, Bank Of America and Apple, according to Wall Street consensus.
But the Oracle of Omaha can not be too pessimistic about prospects, bearing in mind that he has purchased nearly $3 billion of his stock.
Perhaps he thinks the market is undervaluing his fund, bearing in mind his Stellar performance throughout his career.
Sure, Buffett missed a few tech winners like Amazon, but if most investors captured a fraction of his wins, they would be smiling.
If you invested $1,000 into Berkshire five years ago, today, your investment would be worth more than $2,300, a 132% gain or 18% annualized, which is not a bad return!
