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Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) just gave investors quite a bit of insight into its business. The conglomerate released its year-end 2024 earnings report, CEO Warren Buffett's annual letter to shareholders, and reported its fourth quarter stock portfolio activity.
In short, it seems Buffett and his team are taking a very cautious approach to investing right now. While Buffett clarified in his annual letter that Berkshire will always have the majority of its capital invested in equities, there are three important pieces of information to notice.
Berkshire is selling more than it's buying
Warren Buffett and Berkshire's investing team have been net sellers of stocks for some time now, which is to say they're selling more than they buy. This has been especially true in 2024, as Berkshire unloaded a significant portion of Apple (NASDAQ: AAPL) and Bank of America (NYSE: BAC), which were its two largest stock positions at the beginning of last year.
In the fourth quarter, this pattern continued. To be sure, Berkshire is still finding some opportunities to deploy capital, opening a new position in Constellation Brands (NYSE: STZ) and adding to a few existing positions. But Berkshire unloaded shares of 12 different stocks, including another large portion of its Bank of America investment, and roughly three-fourths of its Citigroup (NYSE: C) shares.
Based on Berkshire's portfolio moves, it clearly looks like Buffett is growing more cautious on the banking industry, and that he and his team are still having difficulty finding attractive opportunities to invest in.
Buffett still isn't buying his favorite stock
Over the past few years, there is no stock Berkshire Hathaway has deployed more capital into than its own. Since the buyback plan was modified in 2018 to allow Buffett to buy back stock whenever he perceived a discount to intrinsic value, Berkshire has spent nearly $78 billion on buybacks.
However, in the fourth quarter of 2024, Berkshire didn't buy back any shares at all. This is the second consecutive quarter where the buyback has been paused. With Berkshire trading at or within a few percentage points of its all-time high for most of the fourth quarter, this isn't as much of a surprise as the third-quarter pause. But it certainly appears that Buffett doesn't see a compelling valuation in Berkshire's stock right now.
Berkshire's cash is at an all-time high (again)
Berkshire was holding $334.2 billion in cash, equivalents, and short-term investments at the end of 2024, which is a $9 billion increase compared with the end of the third quarter. Most of this is invested in short-term Treasury securities, from which Berkshire is receiving more than $10 billion in annual interest income.