Warren Buffett owns more of this asset than Apple, Bank of America and American Express combined

Warren Buffett, the company’s chief executive, aged 94 Berkshire Hathaway (BRK.A -0.03%) (BRK.B -0.07%)helped the giant conglomerate build a stock portfolio now worth more than $315 billion. There are 45 stocks in this portfolio. Of this group, Berkshire’s top three positions are Apple, American Expressand Bank of Americawhich are collectively valued at about $168 billion as of September 20. While the numbers are pretty impressive, they still lag behind the amount of money Buffett and Berkshire have allocated to another asset. That’s right, Buffett seems more bullish on this asset than his top three positions combined.

Tightening securely

The asset I am referring to is not an individual stock. Instead, Berkshire bought short-term US Treasuries at an alarmingly fast rate. At the end of the second quarter of 2024, Berkshire had accumulated nearly $235 billion in short-term Treasuries. That’s on top of nearly $38 billion in cash and cash equivalents.

A year ago, Buffett and Berkshire only had about $97 billion of short-term Treasuries. According to Buffett’s cash flow statement, Berkshire purchased nearly $230 billion in Treasuries in the first six months of 2024, though note that Treasuries were also maturing during this period. To put into context how large Berkshire’s position in Treasuries is, consider that the company now owns more short-term Treasuries than the Federal Reserve.

The move gives the impression that Buffett and Berkshire are heading for safety and don’t see a ton of value in the stock right now. After all, Berkshire has only purchased about $4.3 billion in stock through the first half of 2024. Berkshire has purchased nearly $16.5 billion in stock in 2023 and nearly $68 billion in 2022.

This isn’t necessarily a huge surprise, given that the market has been hitting new highs all year. Berkshire has even slowed its own share buybacks lately. This is likely because the stock has reached a high valuation, and the higher a stock is valued, the less attractive buybacks become. On a price-to-tangible book basis, Berkshire’s Class A shares are now nearing a two-year high.

BRK.A price to book value data by YCharts

Is Buffett trying to tell investors something?

Buffett and Berkshire may be signaling their belief that the market has gotten too hot and could be due for a pullback. He is certainly not the only investor with this point of view. The Fed’s interest rate hike campaign has been intense, and many are concerned that it will eventually tip the economy into a recession.

However, the Fed just added a wrinkle to the story with its recent 50 basis point (0.5%) cut in the federal funds rate as the central bank tries to create a soft landing for the economy. Lower interest rates are usually a good backdrop for stocks, so I’ll be interested to see if Buffett and Berkshire make notable moves in the third quarter or if they remain on the sidelines.

That said, timing the market is a fool’s errand. So it’s okay to buy stocks with good long-term horizons as long as you’re prepared to deal with a pullback or some short-term volatility.