After three years of continuous reduction in stock holdings, Buffett finally made a move

Aug 10, 18:23

Original Title: "After Three Years of Continuous Stock Reduction, Buffett Finally Made a Move"

After the U.S. stock market closed on August 9th Beijing time, Berkshire Hathaway released its second-quarter 2026 financial report.

The financial data shows that Berkshire's total revenue in the second quarter of 2026 reached $101.808 billion, an increase of approximately 10% year-over-year. Net profit attributable to shareholders was $25.667 billion, doubling from the same period last year (an increase of approximately 107%). Both operating profit and net profit significantly exceeded market expectations.

However, the most significant point in the financial report was that Berkshire Hathaway finally ended its continuous net stock selling for over three years (14 quarters) and switched to net buying.

With $400 Billion Cash in Hand, Berkshire Finally Took Action

The financial data shows that Berkshire Hathaway bought approximately $23.47 billion in stocks in the second quarter, sold only $3.69 billion, resulting in a net purchase of nearly $19.8 billion, ending the long-term net selling status since 2023.

Of greater interest to investors is the destination of the funds. The financial report revealed that the largest move by Berkshire Hathaway in the previous quarter was to add about $10 billion in investment in Alphabet (Google's parent company) through a private placement. This also officially placed Google among Berkshire Hathaway's top five major holdings—alongside American Express, Apple, Bank of America, and Coca-Cola. As of the end of June, these top five positions accounted for 66% of the stock investment portfolio, maintaining a high concentration.

Although Buffett himself has always been cautious about tech stocks in the long term, when Berkshire Hathaway first initiated a position in Google, Buffett revealed that the investment in Google was a decision made jointly with Greg Abel (Berkshire Hathaway's current CEO, who officially took over from Buffett on January 1st this year). Buffett has also admitted that missing out on Google in its early days was a "historic mistake." This additional investment is based on value investing logic, focusing on Google's search monopoly barrier and stable cash flow.

The billion-dollar increase in holdings this time was a decision made under the leadership of the new CEO, Abel—which may indicate that in the new scenario where Buffett has stepped back and Abel is in charge, Berkshire Hathaway's tolerance and participation in cutting-edge technology are increasing.

In addition to resuming net purchases in the market, Berkshire Hathaway conducted its first stock buyback in two years during the second quarter. The financial report disclosed that Berkshire Hathaway spent approximately $4.527 billion on buybacks last quarter, setting a new quarterly record for 2021; in July, an additional $3.3 billion was spent on buybacks.

In March of this year, Berkshire Hathaway announced the restart of its stock buyback plan, with Abel stating at the time that the buybacks were because the management believed that the "intrinsic value" of their own stock was higher than its market price.

With a shift in investment and buyback pace, Berkshire Hathaway's long-accumulated cash reserve has also begun to change. In recent years, one of the company's biggest labels has been the "cash machine." Due to a lack of large opportunities that meet Buffett's investment criteria, the company's cash and short-term Treasury bill holdings continued to rise, reaching a near-historic high of nearly $400 billion at the end of the first quarter of this year.

However, with increased stock holdings, stock buybacks, and industrial acquisitions (primarily used for the acquisition of the petrochemical company OxyChem and homebuilder Taylor Morrison) successively taking place, Berkshire Hathaway's cash reserve has started to decline. As of June 30, Berkshire held approximately $35.1 billion in cash and cash equivalents, Treasury bills of around $324.9 billion, totaling approximately $364.7 billion, a significant decrease from $397.38 billion at the end of the first quarter.

Once mocked as "out of touch with the times," actually quietly observing on the "shore of turbulent times"

Let's rewind to the years 2023 to early 2026.

In the past few years, the AI technology wave has completely exploded in the global capital markets, with the chip and semiconductor industry chain represented by NVIDIA, SK Hynix, Samsung, and Micron becoming the most crowded trading track.

The market is filled with the fervor of "All in AI," and any fund manager not heavily invested in semiconductors is seen as outdated. Buffett and his Berkshire Hathaway, despite holding billions of dollars in cash on their balance sheet, chose to remain almost apathetic observers.

Mockery ensued. "Buffett is out of touch with the times," "Value investing is dead," "In the face of the AI revolution, the moat theory is outdated," "The old man is not as good as I am"… Such questioning was endless. People delight in the multiples, even tens of multiples, of gains in semiconductor stocks, contrasting with what appears to be Berkshire Hathaway's lukewarm performance, and eagerly rushing to the conclusion that this 90-plus-year-old traditional investment master, along with his chosen successor Abel, has lost their judgment on the technological revolution.

However, Berkshire Hathaway's choice apparently has its own logic. In the second quarter 2026 earnings report, Berkshire Hathaway reiterated its iconic warning: "Any specific quarter's investment gain or loss amount is usually meaningless, with almost no analytical or predictive value."

While this statement may seem aimed at GAAP accounting standards, it is actually a consistent attitude towards short-term market speculation. In the eyes of Buffett and Abel, there may still be doubts about whether the semiconductor industry can escape cyclicality, and there is also uncertainty about when the explosive demand for AI hardware will translate into sustainable cash flow.

As the market entered a euphoric stage and semiconductor companies' stock prices soared, the market environment at that time completely did not conform to Berkshire Hathaway's discipline of "buying great companies at reasonable prices." So when the market was immersed in FOMO sentiment, Berkshire Hathaway chose the most boring but also most in line with its DNA strategy—waiting.

It was not until the last few months that, with the sudden ebb of semiconductor frenzy, the previously overhyped targets experienced a significant pullback. Those investors who had previously mocked Buffett for "missing out" suddenly found that the unrealized gains from chasing semiconductor stocks quickly evaporated during the pullback, while Berkshire Hathaway's tens of billions of dollars in cash not only provided an unparalleled margin of safety but also gave it the confidence to be greedy when others were panicking.

The $19.8 billion net purchase in the second quarter was a validation of this discipline. It is worth noting that Berkshire Hathaway did not chase after the market peak but made a large-scale move only after experiencing market fluctuations and the prices of high-quality assets returning to a reasonable range.

This is exactly the truth Buffett has practiced over the decades—investment is not about who runs the fastest, but about who lives the longest and laughs the last.