Warren Buffett is the chairman and CEO of the Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) investment company. He has overseen a 19.8% compound annual return in Berkshire stock since 1965, which would have been enough to turn an investment of $1,000 back then into over $42.5 million today.

The same investment in the S&P 500 index would be worth just $327,400 today, so it’s no surprise that investors closely monitor Buffett’s every move.

According to Berkshire’s 13-F filing for the second quarter of 2024 (ended June 30), the conglomerate just sold a substantial amount of stock, which implies Buffett might be feeling cautious about the broader market. However, Berkshire’s Q2 financials suggest there is still one stock he appears to absolutely love.

Berkshire slashed its largest position by half

Berkshire spent around $38 billion acquiring shares in iPhone maker Apple between 2016 and 2023. It’s the most money the conglomerate has invested in any company since Buffett took the helm in 1965.

Berkshire’s position in Apple was worth over $170 billion earlier this year, which meant it was sitting on a whopping $130 billion gain. It accounted for almost half of the value of the conglomerate’s entire stock portfolio. Berkshire periodically sold small parcels of Apple stock over the years to lock in gains, but it really ramped up its selling in recent months.

In the first quarter of 2024 (ended March 31), Berkshire sold around 13% of its Apple stake for tax reasons (according to Buffett). It followed that up by selling 49% of its remaining shares during the second quarter. Berkshire is still holding $90 billion worth of Apple stock — and it’s still the conglomerate’s largest position — but many investors are worried that Buffett’s recent activity reflects a negative view on the stock market overall.

That’s because in addition to selling Apple, Berkshire offloaded its entire stakes in Paramount Global and Snowflake, and it trimmed its positions in Chevron, Capital One Financial, and T-Mobile (to name just a few moves).

In fact, as my colleague Sean Williams points out, Q2 was the seventh consecutive quarter in which Berkshire was a net seller of stocks. Berkshire is now sitting on a record $277 billion in cash and equivalents, which implies Buffett is struggling to find opportunities in this market that represent a good value.

The S&P 500 trades at a price-to-earnings (P/E) ratio of 27.4 as of this writing, which is far more expensive than its average P/E of 18.1 going back to when the index was established in the 1950s. Since Buffett’s time-tested strategy involves buying great companies at a fair price, perhaps it’s no surprise that he isn’t enthusiastic about putting money to work right now.

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But there is one stock Buffett continues to buy

Although Buffett is adopting a cautious stance toward the broader market right now, there was one stock Berkshire continued to buy in Q2 — except you won’t find it in the conglomerate’s 13-F, because the stock is… Berkshire Hathaway!

That’s right, Buffett authorized the repurchase of $345 million worth of Berkshire stock in the recent quarter. Buybacks are a popular way for companies to return money to their shareholders. Simply put, they reduce the total number of shares in circulation, which organically increases the price per share by a proportionate amount.

Berkshire has now spent $2.9 billion on buybacks in 2024, and a whopping $77.8 billion since 2018! That’s more than double the amount Buffett spent investing in Apple, and it’s a vote of confidence in the conglomerate’s ability to generate a higher return than most other stocks it could be buying instead.

Berkshire can repurchase stock at its discretion as long as the total value of its cash, equivalents, and holdings in U.S. Treasury Bills remains above $30 billion. Since the conglomerate is sitting on $277 billion in dry powder right now, it’s unlikely the buybacks will stop anytime soon.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Chevron, and Snowflake. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.

Warren Buffett Just Bought Another $345 Million Worth of His Favorite Stock was originally published by The Motley Fool