Warren Buffett’s investment company, Berkshire Hathaway, announced in its Q1 financial report for this year that it has cut its Apple holdings by 13%. At the same time, the company’s cash reserves reached a record high of $188.99 billion. Buffett explained the reason for holding a large amount of cash reserves at the shareholder meeting on the 4th.
In the Q1 2024 financial report, Berkshire Hathaway’s revenue was $89.869 billion, a 5.2% increase compared to the previous year, exceeding market expectations of $85.92 billion. Net profit was $12.702 billion, a 64% decrease compared to the previous year, but still exceeding market expectations of $9.892 billion.
It is worth noting that Berkshire Hathaway’s largest holding, Apple, has dropped in value from $174.3 billion in Q4 of last year to $135.4 billion in Q1 of this year, with approximately 790 million shares. This represents a 13% reduction in holdings (116 million shares) from the previous quarter, marking the second consecutive quarter of significant reduction in Apple holdings after selling 10 million shares in the previous quarter.
However, this has also increased Berkshire Hathaway’s cash reserves from $167.6 billion at the end of 2023 to a current high of $188.99 billion, setting a new company record.
Regarding the reduction in Apple holdings, Buffett stated at the shareholder meeting on the 4th that it was purely for tax considerations. The future corporate income tax rate in the US may be higher to support the expanding US fiscal deficit. Apple may still be Berkshire Hathaway’s largest holding because it is better than American Express and Coca-Cola.
Buffett stated that it is reasonable to assume that Berkshire Hathaway’s cash reserves will reach $200 billion by the end of June, as there are hardly any targeted acquisition opportunities. He explained that Berkshire Hathaway is willing to spend money, but only if the risk is extremely low and there is a potential for significant profit. The company is considering investing in Canada.
Buffett emphasized that holding such a large cash reserve in an increasingly complex world allows the company to act when opportunities arise. Berkshire Hathaway hopes to be prepared to take action in such situations.
Although Buffett’s statement was implicit, the continuously increasing cash reserves also highlight the fact that the company is currently unable to find suitable investment targets. From another perspective, it may also indicate their lack of confidence in the future investment market under high interest rates and persistent inflation, leading to the decision to sell at a high point.
Furthermore, Buffett stated that Berkshire Hathaway’s main investments will always be in the US. The company’s largest holdings, such as Coca-Cola and American Express, have businesses worldwide. The investment in Japanese trading companies has also been profitable, and Buffett is very satisfied with this.
Overall, Buffett stated that if Berkshire Hathaway continues to invest in the domestic US market, it is unlikely to make major mistakes.