Andrew Bary

Warren Buffett is out of step with the markets.

The S&P 500 returned 25% in 2024 and is up another 4% this year, but Berkshire Hathaway refuses to join the party and continues to be a net seller of stocks.

CEO Buffett, who oversees Berkshire's $300 billion equity portfolio, is unenthusiastic about equities with the S&P 500 hitting new highs.

It may take a sizable selloff to get Buffett excited about stocks and few see that coming in 2025. Since he turned 90 in 2020, Buffett has been cautious on stocks. The Berkshire CEO turns 95 in August and celebrates his 60th year at the helm in 2025.

The company's 13-F report on its fourth-quarter equity holdings released late Friday showed that Berkshire was a net seller of about $6 billion of stocks in the period, according to an analysis by Edward Jones analyst James Shanahan.

The pace of sales lightened from the first three quarters of 2024 when Berkshire had net sales of $127 billion of stocks. In those nine months, Berkshire bought just under $6 billion of stocks and sold $133 billion, mostly Apple.

There was only one notable new purchase in the fourth quarter: about $1 billion of Constellation Brands, the wine, beer, and spirits company. Berkshire sold about $5 billion of Bank of America, unloaded $3 billion of Citigroup, and didn't change its Apple stake, which remains at 300 million shares. The Citi stake is nearly gone, totaling about $1 billion now. Some investors thought he might make Citi a major financial holding like Bank of America after buying about $3 billion of the banking company but Buffett went in the opposite direction.

Looking back at 2024, Berkshire was a buyer of a handful of stocks, including Chubb, Occidental Petroleum, Sirius XM Holdings, Domino's Pizza, and Constellation, but none of those purchases was particularly large.

And a few of the buys -- Sirius, Domino's, Constellation -- probably were made by Ted Weschler or Todd Combs, two Berkshire investment managers who operate independently of Buffett and run about 10% of the equity portfolio. Smaller holdings of under $3 billion often are their positions.

Buffett, who handles the other 90%, likely was the buyer of insurer Chubb and Occidental. The Chubb stake, revealed in the first half of 2024, totals about $7 billion. The Occidental holding is about $13 billion, a nearly 30% stake in the energy company. Berkshire began accumulating the Occidental stake in 2022.

Apple was the big story in 2024 as Berkshire cut its holding by about two-thirds to 300 million shares, a stake now worth $73 billion, making it the company's largest stock investment, ahead of No. 2 American Express at about $47 billion. Berkshire sold about $110 billion of Apple last year and $14 billion worth of Bank of America, Barron's estimates.

Neither of those sales was well-timed. Barron's estimates that Berkshire got an average price of about $185 for Apple -- against a current $244 -- and a little over $40 for Bank of America, versus a current $47. That means Berkshire may have left over $35 billion on the table with the Apple sales.

Berkshire is due to report its fourth-quarter earnings on Saturday morning and should release its annual report and shareholder letter at the same time.

It's a good bet that Berkshire's cash and equivalents, which hit a record $310 billion on Sept. 30, was higher at year-end due in part to the stock sales in the fourth quarter.

Buffett has been out of step with the markets before, including during the Internet bubble of the late 1990s. He was vindicated then and could be rewarded once again.

Berkshire investors don't seem upset about mistimed sales and missed buying opportunities, particularly among the Magnificent Seven stocks that have led the market. Berkshire owns Apple, having bought it from 2016-2018, and has a small stake in Amazon.com.

The Berkshire Class A shares, which ended Friday at $719,000, are up 6.5% this year, about two percentage points ahead of the S&P 500. The stock roughly matched the market last year.

Holding more cash than any other American company -- and having the opportunity to deploy it if the markets crater -- seems to sit well with the Berkshire faithful.

Write to Andrew Bary at andrew.bary@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 17, 2025 18:17 ET (23:17 GMT)

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