Business

Warren Buffett’s Berkshire Hathaway dumps billions of dollars of US stocks

Shareholders hear criticism of US bank executives and vote against climate and ESG motions

Charlie Munger said investors should reduce their expectations for stock market returns last month. Photograph: Chandan Khanna/AFP/Getty

Eric Platt
Sun May 7 2023 - 17:22

Warren Buffett’s Berkshire Hathaway sold billions of dollars worth of stock and invested little money in the US equity market in the first three months of the year, a signal the famed investor saw little appeal in a volatile market.

Berkshire disclosed on Saturday that it had sold shares worth $13.3 billion (€12 billion) in the first quarter and bought stocks for a fraction of that figure. Instead, it put $4.4 billion towards repurchasing its own stock, as well as $2.9 billion on the shares of other publicly traded businesses.

The company’s cash pile has risen by $2 billion since the start of this year to $130.6 billion, its highest level since the end of 2021.

Vice chairman, Charlie Munger, last month told the Financial Times that investors should reduce their expectations for stock market returns as the Federal Reserve raises interest rates and the economy slows.

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The pair were joined on stage in downtown Omaha by Gregory Abel and Ajit Jain, two Berkshire vice-chairmen, for the company’s much anticipated annual meeting.

Tens of thousands of shareholders descended on the midwest city to hear from Buffett and the Berkshire team this weekend, where they discussed artificial intelligence and its effects on the investment world, their views on Tesla chief executive, Elon Musk – Musk overestimated himself, Mr Buffett said – as well as succession at the company.

Mr Buffett was pressed for his thoughts on the health of the US banking system, which is in the midst of crisis, given the investor’s long tenure and history backstopping the industry.

He said the executives who led the US banking system into crisis should face “punishment”, adding that US bank directors “should suffer” when they run into trouble, adding that he was wary of most banking stocks because of “the messed-up incentives”.

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It is a change from previous crises, when Berkshire’s capital helped shore up both Goldman Sachs and Bank of America. The latter is now a core holding in the company’s stock portfolio.

Mr Buffett was also questioned over the significant role Apple plays in the Berkshire empire, with its stake in the iPhone maker valued at $151 billion at the end of the first quarter – just under half the value of its entire stock portfolio.

“It just happens to be a better business than any we own,” he said. “Our railroad is a very good business but it's not remotely as good as Apple’s business.”

Shareholders on Saturday overwhelmingly rejected six proposals for environmental, social and governance changes at Warren Buffett’s conglomerate, all of which the billionaire investor and his board opposed. – The Financial Times /Reuters/Guardian

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