Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska, on May 3, 2024.
David A. Grogen | CNBC
Berkshire Hathaway‘s monstrous cash pile topped $300 billion in the third quarter as Warren Buffett continued his stock-selling spree and held back from repurchasing shares.
The Omaha-based conglomerate saw its cash fortress swell to a record $325.2 billion by the end of September, up from $276.9 billion in the second quarter, according to its earnings report released Saturday morning.
The mountain of cash kept growing as the Oracle of Omaha sold significant portions of his biggest equity holdings, namely Apple and Bank of America. Berkshire dumped about a quarter of its gigantic Apple stake in the third quarter, making the fourth consecutive quarter that it has downsized this bet. Meanwhile, since mid-July, Berkshire has reaped more than $10 billion from offloading its longtime Bank of America investment.
Overall, the 94-year-old investor continued to be in a selling mood as Berkshire shed $36.1 billion worth of stock in the third quarter.
No buybacks
Berkshire didn’t repurchase any company shares during the period amid the selling spree. Repurchase activity had already slowed down earlier in the year as Berkshire shares outperformed the broader market to hit record highs.
The conglomerate had bought back just $345 million worth of its own stock in the second quarter, significantly lower than the $2 billion repurchased in each of the prior two quarters. The company states that it will buy back stock when Chairman Buffett “believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.”
Berkshire Hathaway
Class A shares of Berkshire have gained 25% this year, outpacing the S&P 500’s 20.1% year-to-date return. The conglomerate crossed a $1 trillion market cap milestone in the third quarter when it hit an all-time high.
For the third quarter, Berkshire’s operating earnings, which encompass profits from the conglomerate’s fully-owned businesses, totaled $10.1 billion, down about 6% from a year prior due to weak insurance underwriting. The figure was a bit less than analysts estimated, according to the FactSet consensus.
Buffett’s conservative posture comes as the stock market has roared higher this year on expectations for a smooth landing for the economy as inflation comes down and the Federal Reserve keeps cutting interest rates. Interest rates have not quite complied lately, however, with the 10-year Treasury yield climbing back above 4% last month.
Notable investors such as Paul Tudor Jones have become worried about the ballooning fiscal deficit and that neither of the two presidential candidates squaring off next week in the election will cut spending to address it. Buffett has hinted this year he was selling some stock holdings on the notion that tax rates on capital gains would have to be raised at some point to plug the growing deficit.
Check out the companies making headlines before the bell. Trump Media & Technology Group — Shares of President-elect Donald Trump’s media company fell another 4.6% in premarket trading following a 23% plunge in the previous session. The stock, which trades under ticker Trump’s initials, DJT, has given up Wednesday’s rally triggered by Trump’s election victory. It’s down more than 9% week to date as of Thursday’s close. Upstart — The artificial intelligence-focused lending marketplace surged 20% after third-quarter results surpassed Wall Street expectations. Upstart lost 6 cents per share in the quarter, excluding items, much narrower than the loss of 15 cents forecast by analysts, according to LSEG. The company saw $162 million in revenue, topping the consensus expectation for $150 million. Upstart also issued a better-than-expected revenue outlook for the current quarter. Pinterest — Shares plunged roughly 12.6% after the online image-sharing platform posted disappointing fourth-quarter guidance. The company sees revenue between $1.125 billion and $1.145 billion. The midpoint of that guidance, $1.135 billion, was below consensus. Block — Shares retreated by 2.7% as following the financial technology platform’s miss on third-quarter revenue. Block saw $5.98 billion in sales, under the expected $6.24 billion by analysts surveyed by LSEG. However, adjusted earnings per share came in slightly better than the Street anticipated. Airbnb — Share declined 7.3% on mixed quarterly results. Airbnb topped revenue estimates, but earnings came in 1 cent per share shy of expectations. DraftKings — The sports-betting stock lost 5.3% on the back of weak earnings for the third quarter and its outlook. DraftKings guided current-quarter adjusted earnings before interest, taxes, depreciation and amortization in a range of $240 million and $280 million, lower than the estimate for somewhere between $340 million and $420 million, per LSEG. Sweetgreen — The salad chain tumbled 16.5% in the wake of an earnings miss for the third quarter. Sweetgreen recorded losses of 18 cents per share on revenue of $173 million, while analysts surveyed by LSEG had expected a narrower loss of 13 cents per share and $175 million in revenue. Toast — The restaurant management platform’s stock rallied 14.2% on the back of strong third-quarter results and guidance. Looking ahead, Toast said to expect adjusted EBITDA between $90 million and $100 million in the fourth quarter, despite analysts polled by StreetAccount penciling in just $74.8 million. Arista Networks — The computer networking firm pulled back by 4.9% despite issuing strong earnings and announcing a 4-for-1 stock split. Arista earned an adjusted $2.40 per share in the third quarter on revenue of $1.81 billion, while analysts polled by LSEG had predicted $2.08 and $1.74 billion, respectively. Revenue guidance also came in ahead of expectations. Lucid Group — Shares rose about 5% after the electric carmaker’s third-quarter results beat Wall Street’s expectations . The company posted an adjusted loss per share of 28 cents on revenue of $200 million, while analysts were expecting a loss of 30 cents per share on $198 million in revenue, according to LSEG. Capri Holdings — The Versace and Michael Kors parent slid 8% following weak results for the second fiscal quarter. Capri earned an adjusted 65 cents per share on $1.08 billion in revenue, while analysts polled by LSEG were looking for 75 cents a share and $1.18 billion, respectively. Monster Beverage — The energy drink stock dropped 5.4% following a worse-than-expected earnings report for the third quarter. Monster saw 40 cents earned per share, excluding items, and $188 billion in revenue. Analysts polled by FactSet penciled in 43 cents in earnings per share and $1.91 billion in revenue. Affirm — The buy-now-pay-later stock slipped 2.4% despite beating Wall Street expectations on both lines in the fiscal first quarter. Affirm lost an adjusted 31 cents per share, narrower than the consensus forecast of 35 cents, according to LSEG. Revenue came in at $698 million, higher than the $664 million expected by analysts. BioNTech — U.S.-listed shares of the German biotechnology company popped 3.9% on the heels of a Goldman Sachs upgrade to buy from neutral. Goldman cited promise tied to an oncology asset and said the stock could rally more than 25%. Bath & Body Works — The fragrance retailer slid 2.7% in the wake of a Barclays downgrade to underweight from equal weight. Barclays said the company could face pressures on sales and margins in 2025. — CNBC’s Sean Conlon, Yun Li, Pia Singh and Samantha Subin contributed reporting
Pictured here is a construction site of property developer Hongkong Land, in Shanghai on Nov. 4, 2024.
Feature China | Future Publishing | Getty Images
BEIJING – China is widely expected to unveil more stimulus on Friday after its parliament ends a five-day meeting.
Authorities here have ramped up stimulus announcements since late September, fueling a stock rally. President Xi Jinping led a meeting on Sept. 26 that called for strengthening fiscal and monetary support, and stopping the real estate market slump.
While the People’s Bank of China has already cut several interest rates, major increases in government debt and spending requires approval by the country’s parliament, called the National People’s Congress.
That approval could be granted at the weeklong meeting of the legislature’s standing committee. During a similar meeting in October of last year, authorities had approved a rare increase in China’s deficit to 3.8%, from 3%, according to state media.
Expectations for the scale of that fiscal support have increased after Donald Trump — who has threatened harsh tariffs on Chinese goods — won the U.S. presidential election this week. But some analysts are still cautious, warning that Beijing may remain conservative and not issue direct support to consumers.
When discussing planned fiscal support at a press conference last month, Minister of Finance Lan Fo’an emphasized the need to address local government debt problems.
At the parliamentary meeting so far, officials have reviewed a plan to increase the limit on how much debt local governments can issue, according to state media. The additional quota would go toward swapping out local governments’ hidden debt.
Nomura estimates that China has 50 trillion yuan to 60 trillion yuan ($7 trillion to $8.4 trillion) in such hidden debt, and expects Beijing could allow local authorities to increase deb issuance by 10 trillion yuan over the next few years.
That could save local governments 300 billion yuan in interest payments a year, Nomura said.
In recent years, the country’s real estate slump has drastically limited a significant source of local government revenues. Regional authorities have also had to spend on Covid-19 controls during the pandemic.
Even before then, local Chinese government debt had grown to 22% of GDP by the end of 2019, far more than the growth in revenue available to pay that debt, according to an International Monetary Fund report.
Check out the companies making headlines in extended trading: Rivian — The electric vehicle maker added nearly 2% despite missing on both top and bottom lines in the third quarter. Rivian posted an adjusted loss of 99 cents per share on $874 million in revenue. Analysts polled by LSEG had forecast a loss of 92 cents per share on revenue of $990 million. Pinterest — Shares tumbled 11% after the social media company posted weak guidance for its fourth-quarter revenue. Pinterest guided revenue to fall between $1.125 million and $1.145 million. The midpoint of the fourth-quarter guidance, $1.135 million, came below analysts’ estimates of $1.143 million, per LSEG. The company posted beats on the top and bottom lines in the third quarter. Block — Shares dipped 2% after the fintech firm reported a third-quarter revenue miss . Block posted sales of $5.98 billion, while analysts polled by LSEG had anticipated $6.24 billion. On the other hand, Block’s adjusted earnings of 88 cents per share beat analysts’ estimates by one cent. Airbnb — Shares of the online homestays company slipped nearly 3%. Airbnb posted third-quarter earnings of $2.13 per share, 1 cent shy of the consensus forecast, per LSEG. Quarterly revenue of $3.73 billion was slightly above analysts’ estimates for $3.72 billion. Akamai Technologies — Shares slid 6% as the cloud computing company issued disappointing full-year guidance. Akamai said its adjusted earnings for the period will range between $6.31 and $6.38 per share on revenue of $3.966 billion to $3.991 billion. Analysts polled by FactSet anticipated $6.43 per share in earnings and $3.99 billion in revenue. DraftKings — The sports betting company tumbled 4% after guidance missed the mark. DraftKings said its fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization will range between $240 million and $280 million. Analysts polled by LSEG sought $340 million to $420 million. The company also fell short of the Street’s expectations in the third quarter. Sweetgreen — The salad chain dropped more than 10% after missing on top and bottom lines in the third quarter. Sweetgreen announced losses of 18 cents per share, while analysts had expected a loss of 13 cents per share, according to LSEG. Revenue of $173 million also fell short of the $175 million forecast by analysts. Toast — Shares of the restaurant management software company surged 19% on strong fourth-quarter guidance. Toast guided fourth-quarter adjusted EBITDA between $90 million and $100 million. Analysts polled by StreetAccount estimated $74.8 million. Third-quarter results also beat estimates on both top and bottom lines. Expedia Group — Shares of the travel service company jumped 3%. Expedia’s adjusted earnings for the third quarter came in at $6.13 per share, beating analysts’ call for $6.04 a share, per LSEG. Revenue came in at $4.06 billion and narrowly missing analysts’ forecast for $4.11 billion. The company also said Chief Financial Officer Julie Whalen will be stepping down from her role. Arista Networks — The computer networking company fell 6% despite third-quarter results that topped estimates. Arista Networks reported third-quarter adjusted earnings of $2.40 per share on revenue of $1.81 billion. Analysts had expected earnings of $2.08 per share on $1.74 billion in revenue. The company’s fourth-quarter revenue guidance range also beat forecasts. Arista Networks also announced a 4-for-1 stock split. Lucid Group — The electric car manufacturer advanced 6% after narrowly beating analysts’ expectations in the third quarter. Lucid reported an adjusted loss of 28 cents per share on revenue of $200 million in the period. Analysts polled by LSEG expected a loss of 30 cents per share and revenue of $198 million. The company also reaffirmed plans to produce about 9,000 vehicles this year, up 6.8% from 2023. Capri Holdings — The owner of Jimmy Choo lost 7% after results in the fiscal second quarter missed analysts’ estimates. Capri reported adjusted earnings of 65 cents per share on revenue of $1.08 billion, while the Street sought 75 cents a share in earnings and $1.18 billion in revenue, per LSEG. Revenue for Michael Kors and Versace also came up short of expectations. — CNBC’s Darla Mercado, Lisa Kailai Han and Alex Harring contributed reporting.