Buffett Didn’t Aggressively Buy Stocks in the Q4 Sell-Off

Warren Buffett

Berkshire Hathaway (BRK-B) held more than $100 billion in cash at the end of the third quarter. Warren Buffett, the company’s chairman, is known for his value investments. Buffett has made some of his most profitable investments by buying stocks when fear is the dominant theme in the markets. The markets expected Buffett to aggressively buy stocks in the fourth quarter. The markets fell during the quarter.

Buffett Didn’t Aggressively Buy Stocks in the Q4 Sell-Off

Buying opportunity

Several fund managers including David Tepper and Jim Paulsen saw a buying opportunity after the crash. Even President Trump advised buying stocks. US equity markets (SPY) have bounced back sharply from their December lows. General Electric (GE), Alibaba (BABA), Boeing (BA), NVIDIA (NVDA), Advanced Micro Devices (AMD), and Microsoft (MSFT) have risen 25.2%, 34.4%, 14.0%, 21.4%, 32,3% and 10.5%, respectively, based on their closing prices on March 6.

Berkshire Hathaway’s buying activity was slow in the fourth quarter, which is the opposite of what the markets expected from the company. Berkshire Hathaway even sold some Apple shares (AAPL) and exited Oracle (ORCL).

Acquisitions

In an interview with CNBC, Buffett spoke about why he didn’t buy stocks aggressively in the fourth quarter. He said that “stocks were a buy in the fourth quarter.” Buffett said, “sometimes we have other things in mind, too, that may use a lot of money.” Buffett is looking at a major acquisition that would help the company deploy its massive cash pile. While Berkshire Hathaway considered such deals in the fourth quarter, they didn’t materialize.

Next, we’ll discuss how Buffett views Apple.