Warren Buffett just bought another $345 million worth of his favorite stocks

Warren Buffett is the chairman and CEO Berkshire Hathaway (BRK.A -0.43%) (BRK.B -0.39%) investment company. He has overseen a 19.8% compound annual return in Berkshire stock since 1965, which would have been enough to turn a $1,000 investment back then into more than $42.5 million today.

Same investment in S&P 500 index would be worth just $327,400 today, so it’s no surprise that investors are closely monitoring Buffett’s every move.

According to Berkshire’s 13-F filing for the second quarter of 2024 (ended June 30), the conglomerate just sold a substantial amount of stock, meaning Buffett may be feeling wary about the broader market. However, Berkshire’s Q2 financials suggest there’s one more stock it seems to absolutely love.

Image source: The Motley Fool.

Berkshire cut its largest position in half

Berkshire spent about $38 billion to acquire shares in the iPhone maker Apple between 2016 and 2023. It’s the most money the conglomerate has invested in any company since Buffett took over in 1965.

Berkshire’s position in Apple was worth more than $170 billion earlier this year, which meant it had a whopping $130 billion gain. It accounted for nearly half the value of the conglomerate’s entire stock portfolio. Berkshire has periodically sold off small stakes in Apple over the years to make gains, but has really stepped up its selling in recent months.

In the first quarter of 2024 (ended March 31), Berkshire sold about 13% of its Apple stake for tax reasons (according to Buffett). It followed by selling 49% of its remaining shares during the second quarter. Berkshire still owns $90 billion in Apple stock — and is still the conglomerate’s largest position — but many investors are concerned that Buffett’s recent activity reflects a negative view of the stock market as a whole .

That’s because, in addition to selling Apple, Berkshire unloaded all of its holdings Paramount Global and Snowflakeand cut his positions in Chevron, Capital One Financialand T-Mobile (to name just a few moves).

In fact, as my colleague Sean Williams points out, Q2 was the seventh straight quarter in which Berkshire was a net seller of stocks. Berkshire now has a record $277 billion in cash and cash equivalents, meaning Buffett is scrambling to find opportunities in this market that represent good value.

The S&P 500 trades at a price-to-earnings (P/E) ratio of 27.4 at the time of writing, which is much more expensive than the average P/E of 18.1 since the index was established in the 1950s. Since Buffett’s time-tested strategy involves buying great companies at the right price, it’s perhaps no surprise that he’s not excited about putting money to work right now.

But there is one stock Buffett keeps buying

Although Buffett is taking a cautious stance on the broader market right now, there was one stock that Berkshire continued to buy in Q2 — except you won’t find it in the conglomerate’s 13-F because the stock is.. .Berkshire Hathaway!

That’s right, Buffett authorized $345 million worth of Berkshire stock buybacks last quarter. Buybacks are a popular way for companies to return cash to shareholders. Simply put, they reduce the total number of shares outstanding, which organically increases the price per share by a proportionate amount.

Berkshire has now spent $2.9 billion on buybacks in 2024 and $77.8 billion since 2018! That’s more than double the amount Buffett spent investing in Apple, and it’s a vote of confidence in the conglomerate’s ability to generate a higher return than most other stocks he could buy instead.

Berkshire can buy back shares at its discretion as long as the total value of its cash, cash equivalents and holdings in U.S. Treasury bills remains above $30 billion. Since the conglomerate now has $277 billion in dry powder, the buybacks are unlikely to stop anytime soon.