Why Warren Buffett’s billions in cash at Berkshire Hathaway is a bearish stock market signal

Queue the bears.

Berkshire Hathaway’s (BRK-A, BRK-B) cash pile hit another record high in the first quarter of $189 billion, the industrial giant said in its earnings release on Saturday.

That massive cash war chest will likely reach $200 billion by the end of the current quarter, Buffett told shareholders at a packed CHI Health Center today.

Such a hoard of greenbacks signals Buffett is “bearish” on the stock market right now, according to one veteran value investor.

“Buffett is bearish on the stock market. He shows this by growing his massive cash position to $200 billion, selling Apple (AAPL) shares and saying that he doesn’t see bargains,” Smead Capital Management CIO and long-time Buffett watcher Bill Smead told me on the grounds of the Woodstock of Capitalism.

Berkshire’s decision to reduce its stake in Apple and boost the company’s cash position is a move that Buffett says makes sense given the current macroeconomic environment.

“I don’t think anyone sitting at this table has any idea how to use it effectively, and therefore we don’t use it,” Buffett said in response to a shareholder question of why Berkshire isn’t putting the cash reserve to work.

“As the world gets more sophisticated, complicated and intertwined, more can go wrong” and you want to be able to “act when that happens,” Buffett added.

The bears have some meat to feast on, compliments of Buffett.

Berkshire reduced its position in Apple by about 13% during the first three months of the year, marking the second quarter in a row that the conglomerate reduced its stake in the iPhone maker.

As of March 31, Apple accounted for about 40% of Berkshire’s vast stock portfolio, worth a total of $135.4 billion.

Berkshire reduced its position in Apple as the tech giant has struggled in recent quarters and valuation on the stock remains elevated. The stock fell about 10% during the first three months of the year, weighing on Berkshire’s quarterly results.

While some initially looked at Buffett’s decision to reduce the Apple stake as a sign…


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