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As of 6/30, Berkshire was down to $84B worth of Apple stock, compared to $135B three months earlier.
The trimming contributed to a robust increase of cash on hand.
I feel more comfortable holding BRK with less exposure to Apple. It's still a great business, but a bit too richly valued in my view.

we might have more than $300b of cash / equivalents in 3Q with more selling.

that is wild.

I think at the last meeting he said something like, ‘it wouldn’t matter what interest rates would be the cash would still be there…but don’t tell the fed’- meaning whether bills were at 5% or 2% he would still have that much cash.

Selling BAC after the quarter end is also going to add to the pile.

Setting themselves up for huge optionality, either an elephant or repurchases at lower prices.

The market capitalization of BRK is $922.6B so $276.94B cash is 30% of that.

Berkfan- Allow me to do some friendly editing to your post. You forgot an “S” as in Elephants. We haven’t played the game of acquisition targets as far as I know on this new board but names that came up on the old board were Honeywell,Deere,Eaton,Fastenal,Illinois Tool Works and Caterpillar.

Perhaps given WEB’s recent activity we could add Chubb to that list.

Brk could now buy a couple of these major elephants even accounting for the premium and leaving WEB with his 30 Billion in walking around money.

I'm getting a bit annoyed with the direction of this board
Is that better? https://archive.is/z4tT2
(Financial Times article on $76bn of Berkshire stock sales)


P. S. : buy and hold is something to savor and to respect
Right! And boring too.

Berkfan- Allow me to do some friendly editing to your post. You forgot an “S” as in Elephants. We haven’t played the game of acquisition targets as far as I know on this new board but names that came up on the old board were Honeywell,Deere,Eaton,Fastenal,Illinois Tool Works and Caterpillar.

That's a guessing game that has usually proved fruitless, but for once I will make a suggestion.

Blackrock would be nice, current market cap $125bn. It's the ultimate toll booth play, especially in their index tracking work: a fee on some some good fraction of the world's equities, a neverending stream of income, and the ultimate bet on the long term success of equities, especially American ones, which is very much a Buffett view of the world. Valuation levels aren't even all that bad lately relative to prospects. I might buy a little myself, though I'll probably wait (perhaps fruitlessly) for a dip.

Jim

As of 6/30, Berkshire was down to $84B worth of Apple stock, compared to $135B three months earlier.
The trimming contributed to a robust increase of cash on hand.

It really is something to see.
If there were a sentence in the report that summed up the quarter, it's this one:
"Our sales of equity securities produced taxable gains of $59.6 billion in the second quarter..."

-------------

Perhaps I am a bit slow today and somebody can help me out.
Note 7, page 11, where that quote is from, shows:
"Investment gains (losses) on securities sold during the period ... 6,633" [million, for 2024-Q2 only]

That is presumably the total of all realized gains and all realized losses in the quarter.
If the taxable gain on sold positions (essentially Apple) was on the order of $60bn, and the net of all realized sales was more like $7bn, does that mean that other things were sold realizing a loss of $53 billion?
Can't be. What am I missing? The tax treatment isn't all THAT much different from the reporting treatment.

Jim

"If the taxable gain on sold positions (essentially Apple) was on the order of $60bn, and the net of all realized sales was more like $7bn, does that mean that other things were sold realizing a loss of $53 billion?"
——

I believe the $7B refers to the difference between the realized value and the value of the securities sold AT THE BEGINNING OF THE PERIOD, i.e. as of 3/31, given that Berkshire effectively accounts for those unrealized gains every quarter in its P&L, as Buffett notes in every quarterly earnings release.

What am I missing?

Also in Note 7, p. 11: "Equity securities gains and losses include unrealized gains and losses from changes in fair values during the period on equity securities we still own...."

So, were there some sizeable (net) unrealized losses? I haven't looked to see what they might be.

I believe the $7B refers to the difference between the realized value and the value of the securities sold AT THE BEGINNING OF THE PERIOD, i.e. as of 3/31,

No, that won't be it. The line item says quite explicitly it is the figure for "securities sold during the period" under the heading Second Quarter 2024. So, it includes only those things sold after March 31 and up to June 30.

Also in Note 7, p. 11: "Equity securities gains and losses include unrealized gains and losses from changes in fair values during the period on equity securities we still own...." So, were there some sizeable (net) unrealized losses?

No, that won't be the explanation. That line item I'm looking at explicitly says it's the figure for "securities sold during the period", so that line item does not include the unrealized gain/loss, which is the line above, "Change in unrealized investment gains (losses) during the period on securities held at the end of the period".

Still scratching my head.

The footnote talks specifically about taxable profit from sales during the quarter. So the only thing I can think of is that a taxable/GAAP-reportable [in that quarter] distinction is at play. I can't think of any reason that would happen, though. Or a gigantic offsetting realized loss on other "securities sold during the period" that makes no sense to me.

Jim

I think there is a misunderstanding, so let me rephrase my hypothesis:

The quarterly report says:
"In the preceding table, investment gains and losses on equity securities sold during the period represent the difference between the sales proceeds and the fair value of the equity securities sold at the beginning of the applicable period or, if later, the acquisition date."

To me, this means, for example, BRK held shares of XYZ worth $1,000 as of 3/31, which it sold in Q2 for $1,100. The table therefore includes $100 of gains, while the taxable gains are a lot more, i.e. the difference between the $1,100 and its original acquisition cost. Only if the securities were purchased during Q2, the gains shown in the table would be the "real" gains.

As of 6/30, Berkshire was down to $84B worth of Apple stock, compared to $135B three months earlier.

Somebody check my math. I wanted to have a look at how many shares were sold, and at roughly what price.

Apple holding at year end was worth $174.3 billion.
Share price was $192.53, so that corresponded to 905.3 million shares.

Apple holding at end Q1 was worth $135.4 billion.
Share price was $171.48, so that corresponded to 789.6 million shares.

Apple holding at end Q2 was worth $84.2 billion.
Share price was $210.62, so that corresponded to 399.8 million shares.

So, measured by share count, year-to-date 55.84% of the shares were sold: 505.5 million of them.
The Apple sales in Q2 alone were about 389.8 million shares.


Looking at the cash flow statement, total equity sales were $97,123 million year to June 30.
Subtracting the Q1 statement figure of $19,972 million, the stock sales in Q2 alone were $77,151 million.
(These figures are total sales, not sales-net-of-purchases)

It seems there were (unsurprisingly) no changes in the sizes of Coke, Amex, or Bank of America positions year to date. (BAC sales started in July it seems)
There were sales of about 4.1 million share of Chevron in Q2 alone, for which we might pencil in proceeds of around $640 million.
That means that all other sales in Q2 had a total value of about $76,511 million. This could be Apple, or some of the much smaller positions, but let's assume it was all Apple.
If proceeds were 76,511 million for 389.8 million shares sold during Q2 alone, that implies an average sale price of around $196.27.
(possibly a little less if some smaller positions were also sold during Q2).

So, it seems that the Apple sales took place almost entirely before the big price pop June 11-12, definitely not as a reaction to the opportunity it presented.

This lends credence to the notion that maybe (maybe) some additional Apple sales have taken place this quarter. The price that could be realized since end June is 14% more attractive, and that might be a factor.

Personally I think the dominant factor in the Apple reduction is China risk rather than valuation levels or tax rates, but he can't mention that because he is just too prominent. It would cause a poop storm of enormous size in both the financial and political worlds to come right out and say he was selling Apple stock because of perceived political risk from China's leadership.

Jim

The quarterly report says:
"In the preceding table, investment gains and losses on equity securities sold during the period represent the difference between the sales proceeds and the fair value of the equity securities sold at the beginning of the applicable period or, if later, the acquisition date."

Ah, yes, thanks for pointing that out.
The meaning is rather non-obvious (to me), so the explanation does require the careful reading you gave it!

I guess the thinking is that it is background information on the earnings in the quarter only, since all of the other mark-to-market changes had been included in earnings in prior quarters since the purchase. When I saw that it was "realized gains only", I jumped to the incorrect conclusion that it was ALL of the realized gains on those positions, but it's more like "realized gains this quarter beyond the sum of all unrealized gains/losses booked on that position in periods up to prior quarter".

Jim

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