Warren Buffett's company Berkshire Hathaway (BRK.A 0.70%)(BRK.B 0.61%) has been stockpiling cash all year. At the end of the third quarter of 2024, Berkshire had over $320 billion of cash and short-term Treasury bills.
Many see this as a deafening warning to investors that the market, which has set 57 all-time highs and topped 6,000 for several periods this year, is due for a pullback sooner rather than later. Recently, however, Buffett and Berkshire scooped up $563 million of stock in three companies, disclosures Berkshire had to make because it already holds more than a 10% stake in each one.
Are Buffett and Berkshire starting to see value in the stock market?
Buying familiar names
Several days ago, Berkshire filed Form 4 documents disclosing new purchases in Occidental Petroleum (OXY 3.12%), Sirius XM (SIRI +0.39%), and VeriSign (VRSN 1.57%). The company purchased roughly $405 million of Occidental Petroleum, $113 million of Sirius XM, and about $45 million in VeriSign. Its new purchases bring its position in each stock to:
- Occidental Petroleum: 264.2 million shares, 28.2% of the company, and 4.2% of Berkshire's portfolio.
- Sirius XM: 117.5 million shares, 34.6% of the company, and 0.9% of Berkshire's portfolio.
- VeriSign: 13 million shares, 13.6% of the company, and 0.9% of Berkshire's portfolio.
Interestingly, none of these stocks has performed well this year despite the broader market being up close to 26%.
However, all these stocks are classic value plays that Buffett and Berkshire have had a propensity to own -- and with much success. Occidental, a domestic oil company, has struggled due to falling oil prices and a bleak outlook for oil in 2025. It's evident, though, that Buffett and Berkshire feel differently about the direction of oil, at least long term, and see a large domestic oil player as a valuable holding.
NYSE: OXY
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Sirius XM, the parent of Sirius Satellite Radio and Pandora, has also struggled, due to subscriber trends. The company has invested heavily in its podcast platform and taken several corporate actions to make shares more appealing, but there's clearly more work to do.
VeriSign has underperformed due to regulatory concerns and questions about its market and future growth.
Are Buffett and Berkshire seeing value?
It's certainly possible that Buffett and Berkshire are starting to see buying opportunities. Securities laws only require immediate disclosures of stocks in which Berkshire holds at least a 10% position, so it's possible that Berkshire purchased more stocks in the fourth quarter or even launched new positions.
The Dow Jones Industrial Average recently declined for 10 consecutive days, and the S&P 500 index also fell over 2% last week, perhaps wiping away some of the market's froth.
NASDAQ: VRSN
Key Data Points
But in all likelihood, I'm guessing that Buffett and Berkshire view the market as broadly overvalued, with pockets of opportunity. Market breadth is poor right now, so many stocks in the S&P 500 haven't performed well this year, and a more limited number of names have carried the market. All three stocks Berkshire recently purchased haven't performed well and trade at fairly reasonable valuations.
It's always good to see Buffett and Berkshire buying because they're some of the best investors in the world. However, I can't conclusively say this is a buying signal yet.
NASDAQ: SIRI
Key Data Points
Investors should still be weary of stocks trading at sky-high valuations and prepare for some potential pullback or correction in 2025, even if it's only temporary. That said, I think there are buying opportunities in the market for those who do their homework.
