The Ministry of Finance is already preparing a bill for $20 billion.

Warren Buffett is one of the most respected investors in the world, with more than 60 years of experience investing in companies. Known as the “Oracle of Omaha,” he made some of his wealth by investing strategically in times of crisis and then reaping huge rewards in times of prosperity.

However, his investment strategy has taken a significant turn in recent months, with the millionaire appearing to distrust the valuation of companies on the stock market. The result: accumulated liquidity of over $325 billion and a billion dollar tax bill.

Goodbye apple, goodbye. Last August, Warren Buffett ordered the sale of the 55.8% of Apple shares he controls from his company Berkshire Hathaway. A few days ago, Warren Buffett presented his company’s reports, which revealed that the sale of Apple shares continues.

Berkshire Hathaway’s stake in Apple grew from $174.3 billion at the end of 2023 to $69.9 billion in the third quarter of 2024, Berkshire Hathaway reported. This represents the sale of nearly two-thirds of his position in Berkshire Hathaway. Apple.

Change of strategy. Apple’s stock sale implies a change of heart for the technology company it has blindly trusted for the past decade, thereby violating its long-term investment doctrine.

This change represents a much more conservative approach, as Bank Of America sold $10 billion of shares in the last quarter. Other important positions in Berkshire Hathaway’s portfolio, such as Coca-Cola, Chevron or American Express, were not affected by this change in strategy.

325.2 billion are ready to invest. Recent stock sales have only added to the massive mountain of cash that Warren Buffett amassed before the summer, adding a total of $325 billion in liquid funds ready to be reinvested. To put that into perspective, you could buy companies like Coca-Cola, Disney, Nike, Netflix or Goldman Sachs with that amount.

Berkshire Hathaway used some of this money to buy back shares of the company, thereby increasing the value of its own shares. However, this process stopped in June, and no new buyback orders were received. Neither from his actions, nor from any others.

Treasury bill. Warren Buffett could face a huge tax bill for liquidating Apple stock, according to a report from tax consulting firm Barron’s. This tax bill will increase settlements by 15 billion that were already expected after the summer.

“Barron’s estimates that Berkshire could owe more than $20 billion in sales taxes on Apple stock, which likely accounts for nearly the entire $97 billion in taxable stock sales gains that Berkshire made in the first three quarters of 2024,” the consultancy says. firm. . That amount would be calculated by applying the federal tax rate, which is up to 21%, and the corporate tax rate, which can be as high as 5% in Nebraska, where Buffett’s company is taxed.

Why don’t you invest them? It is strange that an investor as experienced as Buffett would choose to pay such a high price for not reinvesting the liquidity generated by selling shares. Nicholas Colas, co-founder of DataTrek Research, explained CNBC: “Buffett believes that stocks, including his own, are overvalued and therefore subject to deep corrections or outright bear markets.”

The expert assures that the S&P 500 index is currently trading with a price-earnings ratio of 21.5, which is one of the highest indicators since 2021 and is only 2.5% from its historical maximum. According to Colas, this could indicate that the market is close to a significant correction that will result in millions of dollars in losses for investors. In short, Warren Buffett looked into the abyss of the markets and didn’t like what he saw below.

In Hatak | Trying not to part with his fortune, Warren Buffett made a unique decision: to deny his daughter a loan.

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