The annual shareholder meeting for Berkshire Hathaway (NYSE:BRK.A) investors took place earlier this month. Legendary investor Warren Buffett spoke, as always, and outlined his current view of the world and financial markets.
Even though the latest 13F filing (showing the stocks bought and sold) isn’t out yet for Q1, we did find out some figures about recent performance. This included selling over $13bn worth of stocks. So what’s the story here?
Concerns around the US stock market
A key takeaway from the question-and-answer session was that both Buffett and his right-hand man Charlie Munger both expect lower stock market returns this year. Two factors were pointed to on this. Weaker US economic growth and the impact of higher interest rates.
I take this warning as definitely valid, but also with a pinch of salt from across the pond. Even though a lot of UK investors have exposure to the US stock market, it isn’t home for most of us. It’s certainly plausible that the US economy could struggle, while the UK could perform just fine.
Even if both the US and the UK underperform, it’s important to remember that many large FTSE 100 stocks are truly global. This means that revenue is diversified around the world, limiting the impact of one geographical area.
Cautious around bank stocks
Another point that was flagged up was Buffett’s concern about banking stocks, given the recent collapse of some large names.
He said that he was more cautious now about investing in this area. We’ll have to wait and see if some of the $13bn worth of selling included some of his holdings in big firms such as Bank of America and Citigroup.
Again, I don’t dispute his thinking on US banks, but wouldn’t say that UK counterparts are in the same position. We haven’t seen any issues with local UK banks such as Lloyds Banking Group or NatWest Group. In fact, higher interest rates have helped these stocks to increase profitability over the past year.
With the resumption of dividends after the pandemic, I feel the banking sector is actually a good place for investors to find income and value right now.
Happy with just a few businesses
It has been well publicised that Buffett has a very concentrated stake in Apple. It’s by far the largest holding in the portfolio at over 38%.
Yet Buffett commented that “it just happens to be a better business than any we own. Our railroad is a very good business but its not remotely as good as Apple’s business.”
The message I get is that if he’s selling other stocks but holding onto the large Apple position, he can’t find many new ideas in the current market. This ties in with the large cash pile that’s building up, now at the highest level since 2021.
I don’t feel this is necessarily a bad warning sign for other investors like myself. Being patient and holding some cash allows investors to take advantage of a potential opportunity as soon as it arises!
