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Investors Await Warren Buffett’s Q1 Update on Stock Activity
Few money managers attract attention like Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett. Known as the “Oracle of Omaha,” Buffett has earned his reputation through an impressive cumulative return of over 6,475,000% on his company’s Class A shares (BRK.A) since he took over six decades ago.
Many investors closely track Buffett’s trading activity, often mirroring his moves. By reviewing quarterly filed Form 13Fs, they can see which stocks Buffett and his advisors, Todd Combs and Ted Weschler, have been buying and selling.
Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.
However, these 13Fs do not capture the full extent of Buffett’s trading activities. The company’s quarterly operating results reveal insights into Buffett’s favored investments that are not reflected in the 13Fs.
On Saturday, May 3, Berkshire Hathaway will release its first-quarter operating results, and many investors are curious if Buffett has allocated some of his company’s $334 billion cash reserve toward his favorite investments.
Will Buffett Continue His Streak of Selling Stocks?
While much of the attention will focus on Berkshire Hathaway’s anticipated sales and operating earnings (excluding unrealized investment gains and losses) for the March quarter, a critical question remains: has Buffett been a net buyer or seller of stocks to start 2025?
In the previous nine quarters, from October 1, 2022, to December 31, 2024, Berkshire Hathaway’s cash flow statements indicated more stocks were sold than bought, totaling nearly $173 billion in net selling.
Significant sales from key positions, such as Apple (NASDAQ: AAPL) and Bank of America (NYSE: BAC), have contributed to bolstering Berkshire’s cash reserves to a record $334.2 billion by the end of 2024.
Despite Buffett’s favorable views on Apple and Bank of America, which still represent $63.4 billion and $27.2 billion of Berkshire’s $277 billion in investments, he remains a discerning value investor. Apple’s price-to-earnings (P/E) ratio exceeded 40 in December, while BofA’s premium to book value surpassed 30% this year—neither stock is the bargain it once was.
Looking at the broader market, the Stock market entered 2025 at one of its highest valuations on record. The Shiller P/E Ratio for the S&P 500 approached 39 in December, while the historical average over the past 154 years has been 17.23.
Historically, the Shiller P/E Ratio has surpassed 30 five times, all of which were followed by a decline in the benchmark index of at least 20%.
Although Buffett would not bet against the U.S. economy or the Stock market, he remains focused on value. The upcoming cash flow statement from Berkshire will indicate whether he has found any investment opportunities.
Image source: Getty Images.
Did Buffett Increase His Investment in Berkshire Hathaway?
In addition to assessing whether Buffett was a net buyer or seller, investors should closely monitor whether he acquired more shares of his favorite company.
Buffett’s preferred Stock does not appear in Berkshire’s quarterly 13Fs. Instead, details of his purchasing can be found in the company’s quarterly operating results, just before the executive certifications. This information arises because Buffett’s preferred Stock to buy is actually shares of Berkshire Hathaway itself.
Before mid-2018, Buffett faced limitations due to the company’s buyback policy, which permitted repurchases only if Berkshire’s share price fell to or below 120% of book value. As a result, Buffett did not invest in buybacks during that time.
On July 17, 2018, Berkshire’s board revised its buyback criteria, giving Buffett more flexibility to repurchase shares without strict limits as long as:
- Berkshire Hathaway maintains at least $30 billion in cash, cash equivalents, and marketable securities; and
- Buffett believes Berkshire shares are undervalued.
From July 1, 2018, to June 30, 2024, Buffett has invested $78 billion in buying back shares of Berkshire, eclipsing the combined costs of significant holdings like Apple, Bank of America, American Express, Coca-Cola, Chevron, and Occidental Petroleum.
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Warren Buffett’s Recent Hesitation on Berkshire Hathaway Shares Raises Questions
Berkshire Hathaway’s chief, Warren Buffett, chose not to buy any of his company’s shares during the third and fourth quarters of 2024. This marks a significant departure from his usual pattern, as it is the first instance since the share buyback rules were altered in July 2018 that Buffett has not served as an active buyer.
Berkshire’s stock behavior often reflects Buffett’s investing sentiment. His absence in purchasing shares can be interpreted as caution regarding market conditions. Currently, Berkshire Hathaway’s stock is approaching an 80% premium over its book value. This premium has not been consistently observed for over 16 years, raising concerns among value investors. As of April 29, the stock’s premium stood at 78%, which might be perceived as an excessive price to pay, especially considering Buffett’s history as a value investor. However, the company retains a robust cash reserve of $334 billion, giving it the ability to seize opportunities when they arise.
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Bank of America is an advertising partner of Motley Fool Money. American Express is also an advertising partner. Sean Williams has positions in Bank of America. The Motley Fool holds positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool additionally recommends Occidental Petroleum. For more details, consult the Motley Fool disclosure policy.
The views and opinions expressed herein represent those of the author and do not necessarily reflect the opinions of Nasdaq, Inc.
