Buffett hints at market caution as yields trend

Warren Buffett, the CEO of Berkshire Hathaway, is known for his impressive investment strategies. He has consistently outperformed the S&P 500 index over the past six decades. Since becoming CEO, Buffett has overseen a nearly 5,600,000% aggregate return in his company’s Class A shares. This remarkable track record has made his investment decisions a topic of great interest among investors. However, Buffett keeps a big secret from Wall Street and his followers. He is under no obligation to reveal it until mid-February. On rare occasions, Buffett secretly builds up sizable stakes in public companies. Berkshire Hathaway must file quarterly 13F forms with the Securities and Exchange Commission (SEC), which provide insights into the company’s investment activities. However, in three instances since the beginning of this decade, Buffett has requested and been granted confidential treatment when filing these 13Fs. This allows Berkshire Hathaway to build up its stake in a company without other investors piling in and driving up the share price. In 2020, Berkshire had two positions that were given confidential treatment, which were later revealed to be Chevron and Verizon Communications. The third occasion occurred between July 1, 2023, and May 15, 2024, when Buffett took a sizable stake in property and casualty insurer Chubb. Buffett’s secrets don’t always involve buying stocks.

Buffett’s selling slows Bank stake

On July 17, he began paring down Berkshire’s stake in Bank of America. Over the last three months, Buffett has overseen the sale of more than 257 million Bank of America stock shares, totaling over $10 billion in market value. The last round of selling on Oct. 10 reduced Berkshire Hathaway’s stake in Bank of America to 9.99%. With the company below the Form 4 filing threshold, Buffett is no longer required to report any additional selling activity within a matter of days. Investors won’t know if Buffett undertakes any further selling of Bank of America’s stock from Oct. 11 through Dec. 31 until Berkshire Hathaway files its 13F on Feb. 14, 2025. The more significant concern for investors is understanding the catalyst that made Buffett a persistent net seller of equities. Over the past seven quarters, Berkshire has sold $131.6 billion more in stocks than it has purchased. Buffett’s willingness to boost Berkshire Hathaway’s cash to an all-time record $276.9 billion suggests that he sees little to no value on Wall Street right now. This could be an ominous warning for investors, as the current market is one of the world’s priciest. As investors eagerly await the revelation of Buffett’s secret trades in mid-February, they continue to watch and mimic his strategic decisions, hoping to emulate his success in the stock market.