How Warren Buffett cut losses with record cash reserve before stock market crash
Berkshire Hathaway's stock portfolio took a hit as its major holdings- Apple, Bank of America and Mitsubishi- saw sharp declines.
Warren Buffett's Berkshire Hathaway faced losses worth approximately $15 billion on its major holdings amid a global stock market sell-off. But Warren Buffett's decision to amass substantial cash reserves by reducing stock market positions helped in cutting losses.
In the last quarter, Berkshire Hathaway had record $277 billion in cash reserves owing to a $76 billion stock sale. This cash pile was kept to be used during market volatility amid growing concerns over a potential US recession.
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What happened to Berkshire Hathaway's stock portfolio this week?
On Monday, Berkshire Hathaway's stock portfolio took a hit as its major holdings- Apple, Bank of America and Mitsubishi- saw sharp declines. This resulted in a substantial reduction in the company's overall valuation as shares in Berkshire Hathaway fell by over 3% bringing the company’s market capitalisation down to $899 billion.
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Berkshire’s stakes in several Japanese companies, such as Mitsui, Marubeni and Sumitomo also saw a decline in the same period while hundreds of millions of dollars were wiped from holdings in American Express, Moody's and Kraft Heinz.
Berkshire Hathaway's Apple decision
Apple- one of Warren Buffett's largest investments- saw its share price drop by more than 7% which resulted in a $5.7 billion loss for Berkshire Hathaway. It was reported that Warren Buffett sold nearly half of its Apple stocks signaling his concern. There were also significant declines in other major tech stocks like Alphabet, Amazon, Meta, Microsoft, Nvidia and Tesla.
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Despite the sell-off, some investors were seen buying like Blue Whale, an investment fund backed by billionaire Peter Hargreaves, purchased shares in Nvidia.