Rick Wilking/Reuters
- Warren Buffett came up short in his search for cheap stocks and businesses last quarter.
- His company Berkshire Hathaway sold over $5 billion of stocks on a net basis, its earnings show.
- Berkshire's cash pile grew to a record $157 billion, surpassing Disney's market capitalization.
Warren Buffett's Berkshire Hathaway grew its cash pile by 7% to an astounding $157 billion last quarter, smashing the conglomerate's previous record of $149 billion in late 2021. Its cash mountain exceeds the market capitalization of Disney, worth $156 billion as of Friday's close.
When Berkshire's pile of cash and Treasury bills grows, it typically signals that Buffett and his colleagues struggled to find much to buy in the stock market or on the acquisition front.
Berkshire's third-quarter earnings, published on Saturday, show that Buffett and his team spent only $1.7 billion on stocks last quarter. Meanwhile, they sold about $7 billion worth, making them net sellers to the tune of $5.3 billion.
They also deployed only $1.1 billion on stock buybacks in the period — about $300 million less than in the second quarter, and a fraction of their $4.4 billion expenditure in the first quarter.
The roughly 13% rise in Berkshire's stock price in the six months to September was undoubtedly a factor in the slower pace of buybacks. Buffett and his business partner, Charlie Munger, only repurchase their company's stock when they deem it to be materially undervalued.
Buffett's sprawling conglomerate is widely considered a microcosm of the US economy, given its vast scale and diverse range of subsidiaries.
Berkshire's operating earnings surged 41% year-on-year to nearly $11 billion last quarter, reflecting a turnaround in its insurance business and a $183 million contribution from Pilot Travel Centers, the truck-stop business it acquired earlier this year. However, the good news was tempered by weakness in the BNSF Railway and Berkshire Hathaway Energy divisions.
Buffett and his team have pulled back on spending significantly this year. They poured a record $68 billion into stocks last year, or $34 billion on a net basis. They also acquired Alleghany for $12 billion and repurchased almost $8 billion of stock in 2022.
While Berkshire has acquired majority stakes in both Pilot and Cove Point LNG this year, it also sold $24 billion of stock on a net basis during the first nine months of this year, and only repurchased about $7 billion of stock.
It's notable that Buffett and his team have moved to capitalize on higher interest rates. Their total cash and cash equivalents fell by 21% to $26 billion between January and September, while their short-term Treasury pile swelled by 36% to $126 billion.