00:00:00
if you look through the latest reporting
00:00:01
data you see that Warren Buffett sold 16
00:00:04
stocks last year if you add all of these
00:00:06
up it accounts for 50% of his portfolio
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sold in a single year nowhere in the
00:00:11
history of his career has Buffett sold
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this many stocks not before the Black
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Monday collapse in 1987 not before the
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2000.com crash not even before the 2007
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financial crisis in total he sold $150
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billion worth of stocks to put that into
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perspective his net sales in the past
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have never exceeded 25 billion in any
00:00:30
calendar year this now leaves him with
00:00:32
more cash than all of his stocks
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combined so what stocks did he sell and
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more importantly why did he sell so much
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I've read every article I could on this
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subject watched every interview to try
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and get an
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answer Warren Buffett does not like
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selling stocks if you study his
00:00:47
philosophy you see that his ideal way of
00:00:49
investing is to buy stocks and just hold
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them forever he's been critical on the
00:00:54
idea of buying a stock only to sell it a
00:00:56
few years later he said we are just the
00:00:59
opp opposite of those who hurry to sell
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and book profits when companies perform
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well but who tenaciously hang on to
00:01:05
businesses they're disappoint Peter
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Lynch aply liken such Behavior to
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cutting the flowers and watering the
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weeds best thing to do is buy a stock
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that you don't ever want to sell I mean
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that and that's what we're trying to do
00:01:16
and that's true when we buy an entire
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business I mean we've bought all of
00:01:19
Geico or we' bought all of C candy or
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the Buffalo news we're not buying those
00:01:22
to resell I mean what we're trying to do
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is buy a business that we will be happy
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with if we own it the rest of our lives
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and we expect to with those if there is
00:01:30
his General philosophy which it is why
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is Warren Buffett now not just selling
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stocks but selling hundreds of billions
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of dollars of his portfolio well there
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are certain conditions when Buffett says
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it is reasonable to sell watch this
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carefully and see if you can pick up the
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four reasons Buffett says on why he
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would sell a stock the only reason I
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would sell something would be if I lost
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confidence in the business or the
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management or it became dramatically
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over overpriced and that doesn't happen
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very often those are the reasons why you
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sell something our inclination is not to
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sell things unless we get really
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discouraged perhaps with the management
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or we think the economic characteristics
00:02:12
of the business change in a big way I
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mean and that happens the first 20 years
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of investing for me or maybe more my
00:02:18
decision to sell almost always was based
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on the fact that I found something else
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I was dying to buy I mean I sold stocks
00:02:23
at you know at three times earnings to
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buy stocks at two times earnings did you
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pick that up the four reasons are one if
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he needs for other things two if he
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loses confidence in the management three
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if he loses confidence in the business
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itself and four if the stock is
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overpriced keep these in mind as we now
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take a look at the stocks that he has
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sold which one of these four is the
00:02:43
reason
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why let's keep it nice and simple we'll
00:02:48
go over the top five stocks that he sold
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these make up 99% of the sales the rest
00:02:53
are dribs and drabs his fifth largest
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sale was a company called snowflake in
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2024 he saw sold 6.1 million shares
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worth of stock about a billion dollar
00:03:02
sold worth 0.3% of the portfolio
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snowflake is a company that provides
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data storage processing and analytical
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services in the cloud the company itself
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has actually been doing well depending
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on how you look at it they have grown
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their customers from 3,000 2021 to
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10,600 today this is meant their revenue
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has grown from 500 million to 2.8
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billion the only problem is this here
00:03:29
their profit it it's been consistently
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getting deeper into the negatives and
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you can see why a company like birkshire
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might not like it - 500 million to- 800
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million I'm surprised he bought it in
00:03:41
the first place to be honest berkshire's
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fourth largest sale was Chevron a stock
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that was once Buffett's fifth largest
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holding he sold 7.4 million shares in
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2024 a total value of 1.1 billion
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accounting for 0.4% of the portfolio
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Chevron is the oil and gas company it's
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massive it operates and 180 countries
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and has a presence in regions with
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abundant oil and gas reserves the US
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Canada Saudi Brazil and Australia to
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name a few as a company it has features
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that are known to attract Warren Buffett
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historically it's spit out a lot of free
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cash flow for its shareholders 21
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billion 37 billion 19 billion it's
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almost like an annual treasury bond
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payment except larger and less
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consistent too Buffett began acquiring
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Chevron in late 2020 back when o oil was
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Dirt Cheap acquiring an initial stake of
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48.5 million shares and an average price
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of $80 that was when the world shut down
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and people were panicking that oil and
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gas were not going to be useful in the
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future buff he took the long r view and
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it paid off the stock did well and even
00:04:45
now Shevon shareholders I wouldn't Panic
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too much although Burkshire has been
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selling Snippets of the stock it's more
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of a gradual decline and ownership not
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necessarily huge selling moving on to
00:04:56
the third largest sale it was Liberty
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series X s at 0.8% of the portfolio with
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the sale there is a little bit of a
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catch because yeah he sold 100 million
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shares 2 billion worth at the same time
00:05:10
he was selling he was also buying the
00:05:12
stock in 2024 so I really don't know
00:05:14
what to make of this maybe Warren
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Buffett was doing some easy Arbitrage
00:05:18
making some quick profits either that or
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he's just become a straight DJ Trader
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but these next two sales are the most
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important ones and we do have a lot more
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information on the reasons why he's
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selling Bank of America was his second
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largest sale which was a bit of a shock
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to berkshire's longtime followers the
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banking and finance industry have always
00:05:39
been big plays in Buffett's portfolio
00:05:41
he's invested in this industry for
00:05:42
decades way back in 1969 Buffett bought
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an entire bank called Illinois National
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Bank me originally in 1969 we bought a
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bank at Berkshire in 1987 they bought
00:05:54
Solomon Brothers berkshire's largest
00:05:56
ever in a single company in the '90s he
00:05:58
fully acquired GE in the 2000s he
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acquired a large stake in Wales Fargo
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and in 2020 Burkshire held stakes in US
00:06:05
Bank Corp Wales Fargo JP Morgan Chase
00:06:08
and Bank of America and then how the
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turntables he exited the JP Morgan
00:06:14
position that year in 2020 he closed out
00:06:16
the Wells Fargo stake in 2022 he sold
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his last share of US Bank at the start
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of 2023 and now he's even reduced the
00:06:22
big position of Bank of America he sold
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235,000 shares with a share price of $46
00:06:28
that means it's worth 10 .9 billion of
00:06:30
sales or 3.5% of his portfolio in terms
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of the Bank of America position itself
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it's 22% of the stock that he sold the
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question is why did he need money for
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other things did he lose confidence in
00:06:43
the management did he lose confidence in
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the business or did he think that the
00:06:47
stock was overpriced watch this clip and
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see what you think some of the banks
00:06:51
that you've sold include USB Wells Fargo
00:06:53
Goldman Sachs JP Morgan PNC should we
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think that there are banks that aren't
00:06:57
run well-run because you've sold them or
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no
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no but I do think that banking can get
00:07:03
in a lot of trouble just because of the
00:07:04
kind of things that they did and that
00:07:06
that I didn't like the banking business
00:07:08
as well as I did before but I did sell
00:07:11
banks that we'd own for 25 or 30 years I
00:07:14
just think the system isn't S quite
00:07:15
right in terms of connecting punishment
00:07:18
to culprits on something that's an
00:07:20
important it's incredibly important that
00:07:23
your banking system run well in the
00:07:25
country and it just isn't going to work
00:07:27
unless you have a banking system that
00:07:29
works and you you don't want them to
00:07:30
create periodic crisis unnecessarily we
00:07:33
don't know where the shareholders of the
00:07:35
big Banks necessarily are heading you
00:07:37
don't know what has happened to the
00:07:39
stickiness of deposits at all they got
00:07:41
changed by 2008 it's got changed by this
00:07:44
I and that changes everything so we're
00:07:46
very cautious in a situation like that
00:07:49
about ownership of banks as we all know
00:07:51
a bank relies on their deposits if no
00:07:54
one deposits money into the bank the
00:07:56
bank is nothing to work with and you
00:07:58
have no business so if the depositors
00:08:00
take their money out game over this is
00:08:02
all relevant because well do you
00:08:04
remember what happened not long ago
00:08:06
remember the bank run with svb when
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depositors tried to withdraw $42 billion
00:08:11
in a single day which the bank did not
00:08:13
have and eventually they went insolvent
00:08:15
and of course at this time it was not
00:08:17
just one bank that had issues it was a
00:08:19
lot of banks that were affected or were
00:08:22
worried in the very least well what
00:08:25
happens if in the future something like
00:08:27
this happens again and what happens when
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it's a larger bank that's affected it
00:08:31
means that the depositors take their
00:08:33
money out the bank is left with no
00:08:35
business and the shareholders lose all
00:08:37
of their money this is what Warren
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Buffett is worried about and why he sold
00:08:40
all of his bank shares he has lost
00:08:42
confidence in the banking industry from
00:08:45
a business ownership perspective for me
00:08:47
that is clear as day and I wonder if it
00:08:50
is the same reason why he sold his
00:08:52
largest position too his largest sale
00:08:55
was a little stock that you may know
00:08:56
it's called apple he sold 605 million
00:08:59
shares of Apple in 2024 that's
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$138 billion worth of the stock or 44%
00:09:05
of the portfolio why would he sell
00:09:07
shares in this company that has
00:09:09
performed so well for him in the past
00:09:11
and made him so much money a company
00:09:13
that he traditionally speaks so highly
00:09:15
of Mark Zuckerberg he gave an interview
00:09:17
on The Joe Rogan Experience which may
00:09:19
give us a clue why you know they haven't
00:09:21
really invented anything great in a
00:09:23
while and it's like Steve Jobs invented
00:09:25
the the iPhone and now they're just kind
00:09:27
of sitting on it 20 years later and and
00:09:29
you they actually I think year-over year
00:09:31
I'm not even sure they're selling more
00:09:33
iPhones at this point I think like the
00:09:35
sales might actually be declining part
00:09:37
of is that each generation it doesn't
00:09:38
actually get that much better so people
00:09:40
are just taking longer to upgrade than
00:09:41
they would before so the number of sales
00:09:43
I think is has generally been flat to
00:09:45
declining eventually I mean the good
00:09:47
news about the tech industry is it's
00:09:48
like it's just super Dynamic and things
00:09:49
are constantly getting invented and I
00:09:51
think compan is if you just don't do a
00:09:52
good job for like 10 years eventually
00:09:54
you're just going to get beat by someone
00:09:56
if we look at the unit sales of the
00:09:58
iPhone luck is not wrong iPhone sales
00:10:01
have been pretty much stagnant since
00:10:02
2015 around that 230 million Mark and
00:10:06
yeah there's been a slight decline over
00:10:08
the last few years the iPhone is core to
00:10:11
Apple's business the lack of growth with
00:10:13
these sales you can say is not ideal for
00:10:17
the shareholders in the least so you
00:10:19
would think that with slowing growth
00:10:21
they probably sell for price to earnings
00:10:23
ratio that is quite low and actually
00:10:25
because of the weird Market that we're
00:10:27
in it's the opposite it for the past 15
00:10:30
years the stock is getting more
00:10:33
expensive on a PE basis it used to sell
00:10:35
for PE ratio of 12 in 2012 and this was
00:10:38
not too long after the end of the
00:10:40
financial crisis so obviously investors
00:10:43
were more cautious back here but right
00:10:45
now investors are plowing money into
00:10:47
stocks especially the big cap companies
00:10:49
Apple sells for p ratio of 37 triple
00:10:53
what it was back then for a large
00:10:55
company that is slowing down it doesn't
00:10:57
appear to be rational but as we all know
00:10:59
no Mr Market is never rational so when
00:11:01
buffer addressed this same question at
00:11:03
the birkshire hathway annual meeting
00:11:05
with Tim Cook in the audience he gave a
00:11:08
different reason as to why he was
00:11:09
selling he said the key reason why he
00:11:12
was selling was because of tax purposes
00:11:15
and yeah I believe that that was a part
00:11:17
of a reason why he sold but do you think
00:11:20
that the core underlying reason he sold
00:11:23
was because of tax or because the price
00:11:26
is high with a slowing business model
00:11:29
I'll let you all decide what you think
00:11:31
so if we add all of these sales together
00:11:33
it accounts for $153 billion worth of
00:11:37
stock sold if we compare that to his
00:11:39
current portfolio which has a value of
00:11:40
266 billion that is 57% worth of sales
00:11:45
however his previous portfolio was worth
00:11:47
410 billion so if you compare that to
00:11:49
his previous portfolio it's only 36% of
00:11:53
his portfolio sold and then if you look
00:11:54
at data Roma if you add all of their
00:11:57
percentages up it is 50.4 4% sold in
00:12:00
2024 personally I believe that this
00:12:02
figure here is actually the best way of
00:12:05
measuring it because you need to compare
00:12:07
to his pass portfolio but either way
00:12:09
it's it's a lot of selling it's the most
00:12:11
aggressive selling behavior in the
00:12:13
company's history burk's Net stock sales
00:12:16
in the past have never exceeded 25
00:12:19
billion in any calendar year yet alone
00:12:22
150 billion The Logical followup to this
00:12:25
is where is Buffett funneling all of
00:12:27
this money into
00:12:31
now to the sponsor of the video without
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company one of Berkshire Hathway's
00:14:36
favorite stocks to plow money into is
00:14:39
biry hathway wait how does that make
00:14:42
sense well it's right you can buy stocks
00:14:44
in your own company and basically what
00:14:46
happens here is that each shareholder
00:14:48
just gets a greater percentage ownership
00:14:50
in the company itself since 2018 Warren
00:14:53
Buffett as the head investor at
00:14:55
Burkshire heway has always made the
00:14:57
decision to buy back share in his own
00:14:59
company for 6 years straight he
00:15:01
allocated $78 billion into stock
00:15:04
BuyBacks that sum makes burer his
00:15:07
favorite stock to buy in that period but
00:15:10
in the third quarter of 2024 he
00:15:13
completely reversed courses he did not
00:15:15
buy a single share of Burkshire he
00:15:18
stopped buying back the stock this can
00:15:20
only mean one thing he believes that
00:15:23
even his own Shares are too pricey maybe
00:15:25
not necessarily overvalued but at the
00:15:28
very least not worth buying at the
00:15:30
current price so if even his own stock
00:15:34
is not worth putting money into where is
00:15:37
all of this money going well if we take
00:15:39
a look at their latest codly statements
00:15:41
they have $32 billion in cash and cash
00:15:45
equivalence but most of the cash has
00:15:47
been plowed into shortterm investments
00:15:50
into US treasury bills $288 billion
00:15:53
worth in this asset so these things here
00:15:55
are us treasury bills with maturities of
00:15:58
3 months or less What's Happening Here
00:16:00
is you're loaning money to the US
00:16:02
government for a short period of time
00:16:04
and in return you get a small return on
00:16:06
your Investments it's safe because it's
00:16:08
backed by the American governments who
00:16:10
control the money supply they won't not
00:16:12
be able to pay you because they can just
00:16:14
print more money to pay you back these
00:16:16
Investments here normally come under the
00:16:18
category of cash and this is where
00:16:20
Buffett has chosen to safeguard his
00:16:22
money if we add the 32 billion plus 288
00:16:25
billion that is
00:16:27
$320 billion in in cash right now if we
00:16:30
compare that to the year before he had
00:16:32
162 billion so he's doubled his cash
00:16:35
position in a single year and it wasn't
00:16:37
exactly small to begin with so why is
00:16:40
Buffett playing this game so safe right
00:16:42
now taking money out of his favorite
00:16:44
investment category and putting it into
00:16:47
something that he historically does not
00:16:51
like sometimes when you need the answer
00:16:53
for the present you have to look to the
00:16:55
past if you've studied the life of
00:16:57
Buffett read his annual reports you you
00:16:59
might remember that there was one period
00:17:01
where he completely dissolved his
00:17:03
investing partnership we have to rewind
00:17:05
56 years to a very different time but in
00:17:08
a way very similar by the late 60s the
00:17:11
stock market had become increasingly
00:17:13
speculative growth stocks had staged a
00:17:16
huge rally with 50 of the top growth
00:17:18
companies in cuttingedge Industries like
00:17:21
Tech and pharmaceuticals becoming so
00:17:24
popular they were called the nifty50
00:17:27
remind you of anything the nifty50 were
00:17:30
considered sure things with investors
00:17:32
willing to pay as high as 50 times
00:17:34
earnings to own the stocks under the
00:17:37
conviction that those Innovative
00:17:38
companies would keep growing at a fast
00:17:40
pace forever remind you of anything but
00:17:43
Buffett by 1969 found nothing of value
00:17:46
to buy so he dissolved his investing
00:17:49
fund and moved his money to the
00:17:50
sidelines remind you of anything Buffett
00:17:53
sent out a letter to his investors
00:17:55
explaining that because of the highly
00:17:57
speculative nature of the market he
00:17:59
could no longer find Investments that he
00:18:01
believed would provide the type of
00:18:03
returns that he had been getting in the
00:18:05
past he'd become disillusioned with the
00:18:07
Market's overvaluation and the
00:18:09
challenges of finding overvalued stocks
00:18:12
in that market so what happened post
00:18:15
1969 once Buffett had dissolved the
00:18:18
partnership well we saw four recessions
00:18:20
stock crash from 860 points to 350
00:18:23
points the Arab Oil Embargo crisis hit
00:18:25
inflation went to 12% and unemployment
00:18:27
reached a post World War II Peak of 9%
00:18:29
did Buffett have a crystal ball here was
00:18:32
he a profit but for stock markets or did
00:18:35
he just have a strong understanding on
00:18:37
stock valuations and Market Cycles if we
00:18:39
fast forward back to today Buffett he's
00:18:42
not exactly dissolving his partnership
00:18:44
in fact he will never dissolve Burkshire
00:18:46
what he is doing is moving assets to
00:18:49
cash and building the Noah's Arc of
00:18:52
investment gunpowder is this an exact
00:18:55
repetition of his actions from 1969 no
00:18:59
but are these actions rhyming with what
00:19:01
he did back then yes yes they are
