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There is a bit of gossip in the market that Warren Buffett’s Berkshire Hathaway has been a net seller of stocks in the last quarter.
In fact, according to Bloomberg reports, Berkshire Hathaway was a net seller of shares for the fourth consecutive quarter. This had not been seen since 2008. Could this be a bearish market signal?
Berkshire Hathaway ended up selling about $ 2 billion more in shares than it bought in the last quarter. This means that the amount of cash on the balance sheet has reached a record high of $ 149.2 billion.
What does Berkshire Hathaway sell?
It has been reported that sales appear to have been in the banking, insurance and financial investment sectors.
In recent times he has also sold his position in General Motors Co. as well as some of his pharmaceutical positions.
Was he looking for opportunities?
Berkshire Hathaway is always on the lookout for potential deals. But the investment conglomerate wants to buy companies for a good price, which is difficult when so many other investment funds, private equity, etc., are considering the same opportunities.
Bloomberg reported that Buffett told investors earlier this year that SPACs (Special Purpose Acquisition Companies) were active in the market and paying for acquisitions.
There could also be a problem with the size of Berkshire Hathaway. Mr Buffett has consistently pointed out that Berkshire Hathaway is so big it has to be a big acquisition to “move the needle”. There aren’t many companies of this size to choose from. The last time Berkshire Hathaway spent big on a business – US $ 37 billion for Precision Castparts – it depreciated the value of that investment.
In the absence of acquisition opportunities, Berkshire Hathaway repurchased its own shares. In the last quarter, Berkshire Hathaway spent US $ 7.6 billion to buy back its own shares.
Will Berkshire Hathaway rush to buy something?
Warren Buffett has always said that it can be important to be patient with investing.
Mr. Buffett once used a baseball analogy to describe how investors can earn better returns while waiting for good opportunities. Speaking of baseball hitter Ted Williams in the HBO documentary Becoming Warren Buffett, CNBC quoted Mr. Buffett as saying:
If he was waiting for the pitch which was really in his sweet spot, he would hit .400. If he were to swing on something in the lower corner, he would probably hit .235. The trick to investing is to just sit there and watch pitch after pitch go by and wait for the one that works best for you. What if people scream, “Swing, you bum! », Ignore them.
Another piece of advice from Warren Buffett when it comes to investment time frames is as follows:
If you’re not ready to own a stock for 10 years, don’t even think about owning it for 10 minutes.
Investors will be interested to see if Berkshire Hathaway’s streak of net selling continues and if / when Warren Buffett decides to release this large sum of money on potential opportunities.