Buffett sells $133 billion in stocks, keeps Coca-Cola and American Express

Warren Buffett sold $133 billion worth of stocks in the first nine months of 2024. This move comes as he raises cash in a market with historically high valuations. However, it’s important to note which stocks he is not selling. Buffett has held Coca-Cola since 1988. Despite market volatility, Coca-Cola was seeing double-digit earnings growth and had significant international expansion opportunities. At the end of Q3 2024, Berkshire Hathaway owned 400 million shares of Coca-Cola, valued at $25 billion and contributing $776 million annually in dividends. While Coca-Cola is not the high-growth company it once was, it continues to expand its earnings and market share. Management projects revenue to grow slightly faster than the global beverage industry’s historical growth rate of 4%. Trading at 21 times 2025 earnings estimates and offering a 3.14% dividend yield, Coca-Cola remains a solid long-term investment. Berkshire Hathaway’s stake in American Express is another long-term holding, with Buffett first investing over 30 years ago. As of Q3 2024, Berkshire held 151 million shares. American Express has shown consistent profitable growth, earning $9.9 billion over the past year compared to $1.4 billion in 1994. American Express stands out in a market dominated by a few major credit card companies by focusing on customer service and a robust card membership model. In Q3, net card fees totaled nearly $2.2 billion, an 18% increase from the previous year. This reliable revenue stream allows the company to continually invest in member benefits. Despite a sluggish consumer spending environment, American Express saw a 6% increase in total transaction volumes over the past year, with projected earnings growth of 25% for 2024. Though the stock trades at 20 times 2025 earnings estimates, analysts forecast an annualized earnings growth rate of about 14% in the long term. While Warren Buffett’s Berkshire Hathaway has been selling substantial portions of its stock portfolio, his continued holdings of Coca-Cola and American Express reflect his confidence in their enduring value and growth potential. Warren Buffett had a memorable year in 2024, marked by significant stock sales, a cash pile exceeding $300 billion, and updates to his estate plans. The 94-year-old CEO of Berkshire Hathaway made headlines with these notable actions: In his annual letter to shareholders, Buffett paid tribute to his long-time business partner, Charlie Munger, who passed away at age 99 in 2023. Buffett credited Munger as the “architect” of Berkshire’s success, while he viewed himself as the “general contractor.” Tens of thousands of Berkshire shareholders gathered in Omaha in May for the annual meeting, where Buffett spoke for several hours. He disclosed that he had sold a significant portion of his stock holdings in the first quarter and warned about the national debt and budget deficit. Berkshire Hathaway’s cash pile swelled to a record $325 billion in 2024, partly due to the sale of $133 billion in stocks, while only $6 billion worth of new stocks were bought. The company also drastically reduced its stock buybacks, spending less than $3 billion between January and September. In a surprising move, Buffett and his investment managers reduced Berkshire’s largest stock holding, Apple, by 67%, dwindling its value from $174 billion to below $70 billion.

Buffett’s confidence in Coca-Cola

They also cut their position in Bank of America by 26% and trimmed holdings in companies such as Capital One. Buffett continued his philanthropic legacy by donating Berkshire shares worth $5.3 billion in June and an additional $1.2 billion in November to five foundations. These donations have brought his total giving to $55 billion since 2006. In November, Buffett published a letter to Berkshire shareholders, reiterating his plans for his vast fortune. He disclosed his estate would be transferred primarily to charitable causes, tasking his three children with distributing it. Buffett’s actions in 2024 highlight his forward-thinking approach and ongoing commitment to responsible investing and philanthropy. In recent years, the U.S. stock market has experienced significant growth. From the end of 2022 through the end of 2024, the S&P 500 index soared by 53%. Excitement about artificial intelligence and interest rate cuts have driven major market indexes to new heights. However, the recent surge has left many stocks trading at sky-high valuations. America’s most famous value investor, Warren Buffett, hasn’t explicitly said he expects a market downturn ahead, but his actions suggest caution. Berkshire Hathaway has been selling significant amounts of stock. During the first nine months of 2024, the total value of Berkshire Hathaway’s stock holdings dropped by 23% to $271.7 billion. Significant sales, including over 605 million shares in a device maker, indicate Buffett’s strategic move. Buffett also exited major stakes in various companies, including Paramount Global. The average stock in the S&P 500 is currently trading for 24.7 times trailing earnings—a historically high figure. Buffett has long favored the ratio of U.S. stock market value to GDP, known as the Buffett Indicator. This ratio recently exceeded 205%, a level considered to be in the danger zone. Buffett’s tendency to hoard cash during periods of market exuberance and deploy it during downturns is well-known. Berkshire Hathaway’s cash reserves and short-term Treasury Bills grew by 96% during the first nine months of 2024, totaling $320.3 billion. This cash reserve positions Buffett to take advantage of the next market downturn. Despite being a net seller for over a year, Buffett continues to buy select stocks. For example, Berkshire acquired new stakes in Chubb Limited and Domino’s Pizza in 2024. While Buffett’s recent actions reflect his cautious stance on the current market high valuations, his strategic positioning and continued selective investments highlight his readiness to capitalize on future opportunities. His substantial cash reserves suggest he is positioning Berkshire Hathaway to benefit from the next market downturn.