The Blubber

The mystery surrounding Warren Buffett’s unusually defensive stance deepened over the weekend.

The 94-year-old CEO of Berkshire Hathaway continued selling stocks in the latest quarter, swelling the company’s record cash reserves to $334 billion. Yet, in his highly anticipated annual letter, Buffett offered no clear explanation for why the investor known for his sharp equity picks appeared to be bracing for uncertainty.

Instead, Buffett insisted that his current positioning did not signal a retreat from his long-held preference for stocks.

“Despite what some commentators currently view as an extraordinary cash position at Berkshire, the great majority of your money remains in equities,” Buffett wrote in the 2024 annual letter released Saturday. “That preference won’t change.”

Berkshire’s massive cash stockpile has raised eyebrows among shareholders and market watchers, particularly as interest rates are expected to decline from their multi-year highs. In recent years, Buffett has voiced frustration over a pricey market and limited buying opportunities. Some investors and analysts, growing impatient with the lack of major moves, are eager for an explanation.

Despite his continued stock sales, Buffett emphasized that Berkshire will remain equity-focused.

“Berkshire shareholders can rest assured that we will forever deploy a substantial majority of their money in equities—mostly American equities, though many of these will have significant international operations,” Buffett wrote. “Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned.”

For now, shareholders will have to wait for further clarity. According to Berkshire’s annual report, also released Saturday, the Omaha-based conglomerate was a net seller of equities for the ninth straight quarter in the final months of last year.

In total, Berkshire offloaded more than $134 billion worth of stocks in 2024, driven primarily by reductions in its two largest equity positions—Apple and Bank of America.

At the same time, Buffett appears unconvinced by his own company’s stock. Berkshire continued its buyback freeze, repurchasing no shares in the fourth quarter or in the first quarter through Feb. 10.

This is despite Berkshire reporting a massive increase in operating earnings on Saturday.

‘Often, nothing looks compelling’

Buffett has largely stayed on the sidelines during a powerful bull market that has seen the S&P 500 climb more than 20% for two consecutive years and notch additional gains in early 2025. However, cracks have started to emerge in the past week, with growing concerns about a slowing economy, market volatility from policy shifts under new President Donald Trump, and lofty stock valuations.

Berkshire shares have gained 25% and 16% over the past two years, respectively, and are up 5% so far this year.

In his letter, Buffett offered a possible clue that stock valuations remain a concern.

“We are impartial in our choice of equity vehicles, investing in either variety based upon where we can best deploy your (and my family’s) savings,” Buffett wrote. “Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities.”

This year, Buffett also voiced strong confidence in his designated successor, Greg Abel, endorsing his ability to identify investment opportunities—drawing a direct comparison to the late Charlie Munger.

“Often, nothing looks compelling; very infrequently we find ourselves knee-deep in opportunities. Greg has vividly shown his ability to act at such times, as did Charlie,” Buffett said.