News emerged over the weekend that the investing legend had sold off a slew of stocks, including half of his Apple stake, and raised an unprecedented fort of cash for Berkshire Hathaway in the second quarter, amid a global stock market rout. , Warren Buffett seems prescient. While the 93-year-old Buffett famously never times the market and advises others not to try to do the same, the moves set off alarm bells for some of his followers on Wall Street, who believe Buffett sees something he doesn’t like. thing. In fact, Buffett has been a net seller of stocks for seven consecutive quarters, and high valuations may keep him on the sidelines. Selling activity increased significantly last quarter, with Berkshire offloading more than $75 billion in shares during the period and boosting the group’s cash reserves to a record $277 billion. Many Buffett followers believe the accelerated sell-off of their top holdings is a pessimistic forecast for the market and economy. His bearish sentiment could fuel recession fears after recent disappointing employment data. “It seems shocking because you have a large, sophisticated investor with an impressive long-term track record,” said Edward Jones analyst James Shanahan. He’s not using any cash to buy stocks, and in fact, he’s liquidating massively. “That looks like a very bad sign. ” Apple’s “dramatic changes” since the beginning of the year. Buffett not only reduced his Apple stock holdings by more than 49%, but also began to sell off his second largest stock, Bank of America stock. What’s more, the Oracle of Omaha doesn’t even seem to find his Berkshire shares attractive, repurchasing just $345 million in the second quarter, significantly lower than the $2 billion he bought back in each of the previous two quarters. . “These look like big changes and he’s probably betting on a recession,” R360 managing partner Barbara Goodstein told CNBC’s “Worldwide Exchange” on Monday. “He’s simultaneously on offense and Be defensive and reduce exposure to potentially overvalued or risky sectors while preparing for major acquisitions. Last quarter, when the S&P 500 rose to a record high, Buffett sold stocks because he expected the U.S. to avoid them. Prevent economic recession while curbing inflation. A weaker-than-expected jobs report for July cast doubt on that forecast. Global markets fell into a deep rout on Monday as worries about an economic slowdown deepened. The Dow Jones Industrial Average plunged as much as 1,000 points at one point, while Japan’s Nikkei 225 plunged 12%, its worst day since the Black Monday crash in 1987. Buffett’s Berkshire Hathaway has not been immune, with shares down more than 3% despite his recent actions. “There’s a huge seller in the market, and they may be exposed to some bad news, market shifts and bearish sentiment,” Shanahan said. .SPX YTD mountain S&P 500 Risk Management on his investment deputies Ted Weschler and Todd Under Combs’ influence, Buffett began buying Apple eight years ago, marking a shift from his usual avoidance of technology companies. The legendary investor spoke highly of CEO Cook’s leadership, iPhone’s loyal consumer base and Apple’s consistent buyback strategy. Berkshire’s stake in Apple grew so much over the years that it once accounted for half of the stock portfolio, leading some to believe that his decision to take profits was part of a portfolio management effort to reduce such high concentration. “This remains Warren Buffett’s largest single position, so this may just be viewed as risk management,” Jim Reed, Deutsche Bank’s global head of economics and thematic research, said in a note. Tax savings? When Buffett slashed Apple stock by 13% in the first quarter, he suggested at Berkshire’s annual meeting in May that it was for tax reasons. He said at the time that selling “a little Apple” this year would benefit Berkshire shareholders in the long run if the U.S. government wants to curb rising fiscal deficits and raise capital gains taxes. But the scale of last quarter’s sell-off suggests it may be more than just a tax-saving ploy. There are other holdings in the portfolio that have a lower cost basis than Apple, which are better suited to trimming for tax purposes. “What I would say is, in terms of the president’s fiscal policy, I think some concessions have to be made. And I think there’s a good chance higher taxes will be imposed. The government wants to take some of your, my, or Berkshire’s income. Get a bigger share, they can do it,” Buffett said at the annual meeting.
Buffett sells stocks to raise cash before sell-off sets off alarm bells | Real Time Headlines
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