On August 30, Warren Buffett — the one and only Oracle of Omaha — turned 94!

Ninety-four!!

His former business partner, Charlie Munger, left this earth nearly a year ago at the age of 99!

Is it something about being connected to Berkshire Hathaway that adds candles to leadership’s birthday cakes?

Who knows. But in his 70-some years at the helm, his (and Munger’s) rules for investing have amassed an investment juggernaut that investors have looked to emulate over the decades. 

But now things appear to be changing…

Buffett’s Fire Sale?

Buffett, who still actively manages Berkshires’ portfolio, has been a net seller of stocks for the past eight quarters, significantly rearranging his portfolio. Here’s the rough breakdown of recent sales according to US News:

He sold over 380 million shares of Apple (AAPL) reducing his position by over 49%. He dumped 104 million shares of Bank of America (BAC) shaving 10% off that position. He pitched 2.6 million shares of Capital One (COF) taking that position down 21%. And finally he sold 4.3 million shares of Chevron (CVX).

He unloaded his entire holdings of Snowflake (SNOW) — a cloud based data storage and management facility — and the media, streaming and entertainment company Paramount Global (PARA).

But while he’s been a net seller, there have been additions to his portfolio. He increased his holdings of Occidental Petroleum (OXY) 7.2 million shares and Chubb Ltd. (CB) by 1.1 million shares.

Plus he added two new holdings in Ulta Beauty (ULTA) and aerospace, defense and electronics manufacturer Heico Corp. (HEI).

The company also stopped buying back its BRK.B shares this year as well.

Add it all up and Buffett has raised Berkshire’s cash position to $320 billion versus just $272 billion in stocks. 

What the Heck is He Thinking?

That is, of course, the $64,000 question.

Buffett has been nothing but legendary in his investing smarts for longer than many investors today have been alive. Since 1965 when he took over Berkshire, he grew the value of the company by 19.8% annually through 2023. 

Frankly, we can’t think of anybody who comes close to that.

So is the man who buys “great companies at fair values” (something he learned from Munger) and holds them forever signaling some sort of change in the air? 

He’s not saying. Or at least what he is saying isn’t satisfying a lot of people.

As Buffett told the Berkshire faithful: “If I’m looking at a 21% rate this year and then we’re [paying] a lot higher percentage later on, I don’t think you’ll actually mind the fact later on that we sold a little Apple this year.”

Selling for tax purposes is a legitimate legitimate reason. But coming from the guy who, for years, has lamented that he pays less in taxes than his employees do…

In 2011, Buffett wrote an op-ed in the New York Times called “Stop Coddling the Super-Rich.” In the article, Buffett said that his taxes amounted to “only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office.“

And even going further according to CNN in 2013…

Buffett has been advocating for a minimum tax on top wage earners — those like himself who benefit from the fact that capital gains are taxed at a lower rate than regular earnings. His proposal, popularly known as the Buffett rule, has the support of the Obama administration but is strongly opposed by Republicans in Congress.

…well, that’s a bit rich. 

But there are other reasons to consider Buffett’s actions. From Reuters:

“Berkshire is a microcosm of the broader economy,” said Cathy Seifert, an analyst at CFRA Research in New York. “Its hoarding cash suggests a ‘risk-off’ mindset, and investors may worry what it means for the economy and markets.”

Is the Oracle calling a top? It’s certainly not impossible. Buffett is the king of buying value — great companies fairly priced. If valuations are exceeding what he deems reasonable, he may be building a cash store to take advantage of a major correction.

That said, it’s important to realize that Buffett is NOT, and has NEVER been, a market timer. The rally could easily continue for another six months or even a year.

Then again, he may have other intentions in mind — like building cash to acquire another target company in a massive deal.

Speculating is all well and good, but the truth is we won’t know until something happens. 

In the meantime, we’re keeping an eye on the Oracle.