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Source: Huanqiu.com

[Global Network Financial Comprehensive Report] Recently, Berkshire Hathaway released its second quarter 2024 financial report, showing that the corporate giant led by world-renowned investor Warren Buffett continued to adopt a defensive strategy, significantly reducing its holdings in Apple Inc., while cash reserves increased to a record of nearly $277 billion. This move shows that Buffett is cautious about the current US economy and stock market valuations.

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According to the financial report, Berkshire sold about $75.5 billion worth of stocks in the second quarter, including reducing its holdings of Apple by nearly half, from 790 million shares to about 400 million shares. As of June 30, Berkshire still held about $84.2 billion worth of Apple shares. Despite the reduction of about 49%, Apple is still Berkshire's largest stock holding. This reduction has caused Berkshire's cash reserves to soar from $189 billion at the end of the first quarter to $276.9 billion, a record high.

Berkshire's move comes at a time of heightened volatility in the U.S. stock market, with the Nasdaq index entering correction territory and a weak jobs report fueling concerns about U.S. economic activity. "Berkshire is taking a defensive approach, a cautious response to the current macroeconomic environment and stock market valuations," said Cathy Seifert, an analyst at CFRA Research.

It is worth noting that this is the seventh consecutive quarter that Berkshire has sold more stocks than it bought. In the second quarter, Berkshire repurchased only $345 million worth of its own shares, far lower than the repurchase scale in previous quarters, and no stock repurchases were made in the first three weeks of July. Analyst Jim Shanahan said that Buffett seemed to have reservations about the current investment opportunities in the stock market, which reflects his cautious view of the market and the economy.

Although Berkshire's cash reserves have increased significantly, its revenue and net profit have not grown in sync. According to the financial report, Berkshire's second-quarter revenue was US$93.653 billion, a year-on-year increase of 1.2%, but its net profit fell 15.5% year-on-year to US$30.35 billion. This decline is partly attributed to the impact of stock price fluctuations in different periods on the value of Berkshire's stock investment.

Buffett said at Berkshire's annual shareholder meeting that he expects Apple to remain Berkshire's largest stock investment, but the sale of some shares is for tax and portfolio management reasons. He mentioned that if the United States raises capital gains taxes in the future, selling some Apple shares in advance will benefit Berkshire shareholders in the long run.

Berkshire also sold more than $3.8 billion worth of Bank of America shares, its second-largest holding after Apple, a move that further demonstrates Buffett's defensive stance in the current market environment.

Berkshire's insurance businesses, especially Geico Auto Insurance, performed well in the second quarter, with underwriting profits more than tripling. However, other major businesses, such as railroads and energy, performed relatively flat, with overall revenue growth lackluster.