Warren Buffett has a huge cash pile on his hands with his investing firm Berkshire Hathaway. As of the latest quarter in 2023, he has $167.4 billion on his hand. As 13f filling reports Warren Buffett is not adding any stock significantly.
In quarter 4 in 2024 Warren Buffett has just bought 3 stocks, which are Sirius XM Holdings Inc, Chevron Corp. & Occidental Petroleum. These are all extremely small piles. If we add all of the buys up together they make 1.07% of the entire portfolio. That is nothing when compared to Berkshire Hathaway.
Then you look at the stocks that he sold it is a somewhat big number compared to the bought percentage. All up in terms of percentage he sold 1.65%. the question is why? Why warren Buffett is not buying any stocks & holding cash while selling some portion of his portfolio? Why Warren is behaving so unusually compared to most investors who can’t stop buying?
The 2008 Market Crash
If we look back throughout history it gives us big clues as to why Buffett is saving up all of this cash. When we look back into the 2008 recession while most investors were panicking and having the worst time of their lives Buffett was in heaven. Stock prices were crashing, house prices were collapsing, and everyone lost money that year. But Buffett was very happy because he could buy stocks at unbelievably cheap prices.
Everything was on sale in 2008. One thing anyone who wanted to buy these cheap stocks in this crisis was cash, a lot of cash. If Warren didn’t have cash he wouldn’t be able to buy anything. So in 2007 just before the recession hit, he was saving up ash like a madman. He had almost $70 billion in cash & when the crash hit he started to deploy his cash 7 bought stocks heavily.
The Strategy
Buffett is playing the same strategy now that he has played throughout most of his investing career. Warren is always looking for those big business opportunities that come along very rarely & when they do come along he needs a lot of cash.
In 1972 Buffett needed a lot of money to buy See’s Candies. He bought the company for $25 million. In 2023 See’s Candy made $410 million in sales & $82 million in profit. Yearly profit is now more than triple the amounts that he originally paid for the business.
