Warren Buffett, 94, is signaling that he’s not optimistic about the stock market. Berkshire Hathaway’s latest move reflects this, as the conglomerate’s cash pile reached a record $325.2 billion in the third quarter. This represents more than the combined value of Nike, Goldman Sachs, Coca-Cola, and Disney.
Berkshire has reduced its stakes in key companies like Apple and Bank of America. The company sold around 300 million Apple shares, or about 25% of its stake, and raised over $10 billion from selling Bank of America shares since summer. Notably, Buffett is not buying back his own stock for the first time since the summer.
Analysts have identified several reasons for this unusual behavior. One possibility is that Buffett believes stocks are overvalued, including his own, making them susceptible to a correction or bear market. The S&P 500 trades at its highest price-to-earnings multiple in nearly two years, and Berkshire Class A stock is similarly valued.
Some speculate that Buffett may step back from active portfolio management, allowing successors to remake the company’s portfolio and adjust the stock repurchase program. However, it’s unclear when he will make this move. Others believe he might be preparing for large acquisitions, but given his age and succession plans, this seems less likely.
Meanwhile, on Wall Street, Morgan Stanley upgraded Roblox to “overweight” from “equal weight,” citing its user-generated content platform as a key driver of accelerating share gains. The analyst firm expressed confidence in the company’s ability to execute and exceed expectations.
Source: https://www.cnbc.com/2024/11/04/3-reasons-why-warren-buffett-is-shunning-stocks-including-his-own.html