Warren Buffett's Berkshire Hathaway hoarded cash, sold stocks, and halted buybacks ahead of the election

• Investors aren't sure how to position their portfolios going into the US presidential election.
• Warren Buffett signaled in Berkshire Hathaway's third-quarter earnings that he was being cautious.
• The investor built a record cash pile, slashed his two biggest stock bets, and halted buybacks.

Investors are puzzling over how to play the market ahead of Tuesday's US presidential election. Warren Buffett flashed his poker hand on Saturday, revealing he amassed a record amount of cash, took a knife to his two largest stock bets, and ceased buying shares of his own company last quarter.

Berkshire Hathaway's 94-year-old boss has refrained from endorsing either Donald Trump or Kamala Harris, likely because he's worried the backlash could harm his employees and shareholders. But his conglomerate's third-quarter earnings offered fresh evidence that he's wary of heady stock valuations and eager to take some chips off the table.

Buffett's company grew its mountain of cash, Treasury bills, and other liquid investments to an unprecedented $325 billion between July and September 30, or $310 billion if you subtract nearly $15 billion of payables for Treasury bill purchases. Berkshire's cash pile was below $110 billion two years earlier.

The legendary investor and his team sold $36 billion of shares and only made purchases worth $1.5 billion, marking their eighth straight quarter as net sellers.

They offloaded a net $127 billion of stocks over the first nine months of 2024 — more than triple the net $24 billion worth they jettisoned last year, and a stark shift from the net $34 billion of stock they bought in 2022.

Notably, Berkshire pared its bets on Apple and Bank of America, its two largest stock positions going into the quarter. It sliced its stake in the iPhone maker by 60% between January and September, reducing its value from about $174 billion to $70 billion.

Bershire also cut its holding in the banking giant by about 23% between mid-July and early October, reducing its worth to below $32 billion.

Buffett has said that buybacks only make financial sense when a stock is trading at a discount to its intrinsic value. After repurchasing $20 billion of Berkshire shares between the start of 2022 and June 30 this year, Buffett didn't buy back a single share last quarter — a strong signal that he no longer sees his company's stock as a bargain following its more than 20% gain this year to record highs.

"When the world's most famous living investor continues to sell down shares and sit on a considerable cash pile, it tells you something very important about the state of the market," Russ Mould, AJ Bell's investment director, said in a note on Monday.

Berkshire's steady stock disposals, cuts to Apple and Bank of America, and use of the sale proceeds to buy Treasury bills "suggests that Buffett has serious concerns about the economic backdrop and the current state of the stock market," Mould said. "It implies a risk-off mentality and the hallmarks of an investor who is prepared to sit and wait for a better entry point."