Warren Buffett's Berkshire Hathaway is wrapping up a particularly strong year, even as the Oracle of Omaha paused buybacks and sold chunks of top holdings before their big rallies. Class A shares of the Omaha-based conglomerate have climbed 27% in 2024, slightly outperforming the S & P 500. Berkshire, whose shares have exceeded the $700,000 threshold, is on track to post its best year since 2021 and its ninth positive year in a row.
The 94-year-old legendary investor made a slew of head-turning moves during the year. On the top of the list was aggressively dumping his two largest holdings, Apple and Bank of America. Buffett started trimming his stake in the iPhone maker in the fourth quarter of 2023 and ramped up selling in the second quarter of 2024, when he surprisingly dumped nearly half of the position. After offloading another quarter of his stake, Buffett now owns about 300 million shares. That's down 67.2% from the end of the third quarter last year.
Spectators were also surprised by Buffett's downsizing of his longtime Bank of America stake. Berkshire started a selling spree in July that eventually took the holding below the 10% threshold, which puts further action under wraps for the time being. Both stocks have done well this year, however, with Apple up nearly 28% and Bank of America up over 35%. The bank stock got a big boost from the reelection of Donald Trump on hopes of deregulation in the banking industry.
These are not the only stocks Berkshire sold this year. All told, Berkshire sold a whopping $133 billion worth of stocks in the first three quarters of 2024.
As Berkshire's strong rally pushed up valuations, Buffett decided to bring buybacks to a halt. Berkshire didn't repurchase any company shares during the third quarter. Repurchase activity had already slowed down earlier in the year with just $345 million in the second quarter, significantly lower than the $2 billion repurchased in each of the prior two quarters. The company states that it will buy back stock when Buffett "believes that the repurchase price is below Berkshire's intrinsic value, conservatively determined."
Berkshire's monstrous cash pile topped $300 billion for the first time during the third quarter amid Buffett's stock selling spree. As for major acquisitions, Buffett once again mostly sat on the sidelines as asset prices continued to ascend. One minor deal Berkshire did this year was buying the 8% remaining stake in Berkshire Hathaway Energy, a utility giant it has owned a majority stake in since 1999. Berkshire bought the stake for $2.37 billion in cash, $600 million in debt as well as a significant amount of Berkshire Class B shares from the heirs of the late Walter Scott -- a former director and a lifelong friend of Buffett who died in 2021. Some think that Buffett is holding out for better opportunities when prices come down during an economic downturn, while strengthening the cash war chest as a way to lay the foundation for his successor, Greg Abel.
"We believe that some of the $325 billion in cash will eventually be used to invest in a 'distress' situation, either an industry or individual company similar to what BRK did during the last economic crisis," Kevin Heal, Argus analyst who covers Berkshire, said in a note. "This will also provide an opportunity for the successors to make their own mark when Mr. Buffett officially hands over the reins."
Berkshire did make a few small equity investments during the year, likely by Buffett's investing lieutenants Ted Weschler and Todd Combs. Most recently, the conglomerate disclosed a $500 million stake in Domino's Pizza as well as a small position in swimming pool supplier Pool Corp. last quarter. Berkshire also hiked its stake in satellite radio company SiriusXM to over 30%.