Warren Buffett's Berkshire Hathaway reduces its Apple stake by half and increases its cash reserves to $277 billion, despite achieving a record operating profit.

 Warren Buffett appears to have become more cautious about stocks, with Berkshire Hathaway's cash reserves climbing to nearly $277 billion and the company reducing its stake in Apple by approximately half, despite the conglomerate achieving a record quarterly operating profit.

Berkshire’s recent performance indicates that the 93-year-old Buffett, a highly esteemed investor, may be growing concerned about the broader U.S. economy or inflated stock market valuations.

These results were published on Saturday, following a stock market downturn that sent the Nasdaq into correction territory and a weak jobs report that fueled concerns about U.S. economic activity and whether the Federal Reserve had delayed too long in cutting interest rates.

Cathy Seifert, an analyst at CFRA Research who maintains a "buy" rating on Berkshire, suggested, "Considering both Berkshire's financials and the macroeconomic data, it's reasonable to conclude that Berkshire is taking a more defensive stance."

As of June 30, Berkshire’s cash holdings increased to $276.9 billion from $189 billion three months earlier, largely due to selling a net $75.5 billion worth of stocks during the quarter. This marks the seventh consecutive quarter in which Berkshire sold more stocks than it acquired.

The company sold about 390 million Apple shares, in addition to the 115 million shares sold between January and March. Despite Apple's stock price rising 23%, Berkshire still held approximately 400 million shares valued at $84.2 billion as of June 30.

Berkshire’s profit from its various businesses in the second quarter grew by 15% to $11.6 billion, or about $8,073 per Class A share, up from $10.04 billion a year earlier.

Nearly half of this profit was generated from Berkshire’s insurance operations, including a significant increase in underwriting profit at the Geico car insurer. However, revenue increased only slightly by 1% to $93.65 billion, with little change in major businesses like the BNSF railroad and Berkshire Hathaway Energy.

Net income dropped 15% to $30.34 billion from $35.91 billion the previous year due to higher stock prices boosting the value of Berkshire's investment portfolio, including its stake in Apple.

Buffett has consistently advised shareholders to disregard Berkshire’s quarterly investment gains and losses, which can lead to significant net profits or losses.

Although Berkshire commits to maintaining a minimum of $30 billion in cash, it often allows the cash to accumulate when it cannot find suitable businesses or stocks to purchase at fair prices.

Returns from short-term Treasuries, however, are expected to decline once rate cuts are implemented.

Berkshire is also spending less on buying back its own stock, repurchasing only $345 million in the second quarter and none in the first three weeks of July.

Buffett remarked at Berkshire’s annual meeting on May 4, “We’d love to spend it, but we won’t unless we believe we’re making a decision with minimal risk that could yield significant returns,” referring to Berkshire’s cash reserves.

Berkshire did not immediately respond to a request for comment on Saturday.

Buffett remains a significant supporter of Apple, valuing the company’s strong pricing power and loyal customer base. He mentioned at the annual meeting that he expects Apple to continue being Berkshire’s largest stock investment, though selling some shares was prudent given the anticipated increase in the federal tax rate on gains.

Since mid-July, Berkshire has also sold over $3.8 billion in shares of Bank of America, its second-largest stock holding.

Buffett has led Berkshire Hathaway, based in Omaha, Nebraska, since 1965, transforming it into a conglomerate with numerous businesses, including industrial and manufacturing firms, a major real estate brokerage, Dairy Queen, and Fruit of the Loom.

Greg Abel, Berkshire's Vice Chairman at 62, is expected to eventually succeed Buffett as the company's CEO.

Quarterly insurance profit surged 54% to $5.58 billion, benefiting from higher investment income and Geico’s ability to raise premiums even as the number of driver claims decreased.

Profit at BNSF fell by 3% due to additional funds set aside for lawsuits, which offset reduced operating costs and increased shipping of consumer and agricultural goods.

Lawsuits also impacted Berkshire Hathaway Energy, where profit dropped 17% due to issues with the PacifiCorp utility unit, which is facing significant claims related to Oregon wildfires in 2020.

PacifiCorp increased its reserve for wildfire losses to $2.7 billion as of June 30, up from $2.4 billion three months earlier, with potential for further increases.

Berkshire’s Class A shares closed at $641,435 on Friday, marking an 18% rise this year, compared to a 12% increase in the Standard & Poor’s 500.