On November 15th, according to the disclosure of the US Securities and Exchange Commission (SEC), Berkshire Hathaway, a subsidiary of Warren Buffett, submitted its third quarter holdings report (13F) as of September 30, 2024.
As of the end of the third quarter, the total market value of Berkshire Hathaway's holdings decreased from $280 billion to $266 billion. Among them, the top five heavy holdings include Apple, American Express, Bank of America, Coca Cola, and Chevron. Buffett continued to reduce his holdings of Apple and Bank of America, but bought consumer companies Domino's and P&L.
From the perspective of reducing holdings, Berkshire Hathaway reduced its holdings of 100 million shares of Apple in the third quarter, reducing its holdings from 30.09% in the previous quarter to 26.24%. Currently, Apple remains Berkshire Hathaway's largest holdings of individual stocks.
Berkshire Hathaway's reduction of holdings in Bank of America is also ongoing, and as of the end of the third quarter, Bank of America's shareholding has also dropped to 10.4%. Regulatory data shows that after October, Berkshire Hathaway continued to reduce its holdings in Bank of America, with its shareholding ratio falling below the critical disclosure threshold of 10%.
It is worth noting that Buffett almost liquidated his holdings in the American beauty retail giant Ulta Beauty (hereinafter referred to as "Ulta"), which he unexpectedly built in the second quarter of this year. Analysts say that Buffett's significant adjustment in just one quarter may be due to the impact of the company's second quarter financial report falling short of expectations and lowering its full year performance outlook.
From the perspective of increasing holdings, Berkshire Hathaway bought Domino's Pizza, pool supplies distributor Pool, and Haike Airlines in the third quarter, with Domino's Pizza and Pool being first-time buyers.
The market generally believes that both Domino's and P&L have underperformed the overall market this year, and low valuations are one of the reasons why Buffett chose to build a position. The stock price of Domino's has risen by about 6% over the year, while the stock price of P&L has fallen by about 8%. After the release of Buffett's position report, both Domino's and P&L's US stocks saw significant gains after hours, with gains reaching 7.6% and 5.68%, respectively.
In recent years, Buffett has frequently stated at shareholder meetings that he lacks good investment opportunities and therefore holds a large amount of cash. Recently, the release of the third quarter financial report showed that Berkshire Hathaway's cash reserves reached a historic high of $325.2 billion, an increase of 17.4% from $276.9 billion at the end of the second quarter.
Analysts generally believe that with US stock valuations at a high level, Buffett's holding of a large amount of cash indicates a cautious attitude towards the current market. The valuations of US stocks, especially technology stocks and some popular industries such as artificial intelligence and green energy, are already at historic highs. Despite the strong profitability of enterprises, the prices of many stocks far exceed their intrinsic value, and there is a risk of overvaluation in the market.
From the perspective of measuring stock value indicators, the current P/E ratio of the S&P 500 index is 28 times, which has been higher than the 10-year average since the beginning of this year, while the P/E ratio of other major developed economy stock markets generally does not exceed 20 times. Measured by the Buffett Index, which is the ratio of total US stock market value to GDP, the ratio has risen to over 200, reaching its highest level since the end of 2021.