The market was buzzing because of the huge cash supplies of Warren Buffett, reached with a record level. The legendary investor was a net seller in the last nine quarters, and Berksshire Hathaway (Nyse: mustache)(Nyse: mustache ended in 2024 with $ 334 billion in cash and equivalents.
This certainly sounds like a market warning signal, but in his annual letter to a shareholder published last week, Buffett gave an explanation for this stock that may not be what you think.
Berksshire Hathaway has increased its money for over two years, and as it is growing, the message on the market seems to look clearer. He sold $ 143 billion in stock in 2024, while buying only $ 9 billion. This is a net sale of $ 134 billion for a year.
To understand what is happening in Berkshire Hathaway, you have to understand what Berksshire is and what is not. It is a holding with ownership in 189 operational companies, with many owned, and has a position in about 45 shares.
Buffett said 53% of Berksshire Hathaway companies reported on the decline in earnings at the age of 2024, but Holding benefited from a predictable increase in revenue from investing from improvement Treasury account bringsand that “significantly” expanded its position in them. In fact, the vast majority of the 2024 monetary position were in the treasury accounts, and they protected themselves from the declining business of Berkshire Hathaway business.
Buffett often talks about his responsibility towards shareholders. This year, he said: “Our goal is to communicate with you in a way that we would like to use if our position is reverse – that is, if you are the Berksshire CEO while I and my family were passive investors, believing you in our savings.”
People entrust him their money, and like any money manager, his job is to maximize the value of the shareholder. His job is not speculated in capital or focus solely on the portfolio of capital. It’s just one part of a huge whole, and part of that responsibility is to increase the company’s earnings.
In other words, what Buffett does for Berksshire Hathaway could be very different from what individual investors do with their money. Because of this, how much an investor can get by following Buffett’s moves and hearing his gems, you should take it all with a grain of salt.
This also does not deny the fact that the market is currently surely expensive, and Buffett does not buy shares that do not fit its investment criteria, one of which is of solid value. It may not be holding cash waiting for the market to fall, but it is emigrated that there are not too many large offers, so it does not buy.
