Buffett Ditches U.S. Bank Stocks for Treasuries
Recently, Buffett has been offloading part of $Berkshire Hathaway(BRK.A)$ $Berkshire Hathaway(BRK.B)$ 's investment in $Bank of America(BAC)$ , which used to be Berkshire’s second-largest holding after $Apple(AAPL)$ . But now, Buffett is cutting back on BAC and likely moving that capital into another high-yield investment.
Sold BAC & AAPL
In Q3 alone, he sold over $9.6 billion worth of BAC shares, and another $140 million just in the first two days of October.
Bank of America isn’t the only company Buffett has been trimming. Between Q4 2023 and Q2 this year, he sold more than half of Berkshire’s Apple holdings. Even though Apple is still the biggest position, the Q2 sales marked one of the largest in Berkshire’s history.
Since Q4 2022, Buffett has been a net seller of stocks for seven consecutive quarters. With the scale of the Bank of America sales, Q3 earnings will likely confirm an eighth.
Why is Buffett doing this? It’s pretty simple: taxes and valuations.
Buffett anticipates higher corporate tax rates after current laws expire in 2025, potentially jumping from 21% to 35%. With growing deficits, he believes the current rates aren’t sustainable.
Buy U.S. Treasuries
In the meantime, Buffett’s been funneling money into U.S. Treasuries. As of Q2, Berkshire held $238.7 billion in T-bills and around $38.2 billion in cash. These short-term bonds mature within 12 months, offering safety and higher yields compared to long-term ones.
Buffett is happy to park Berkshire’s assets there, even if yields aren’t sky-high, because he thinks there’s no better alternative right now.
Buffett’s strategy isn’t about chasing high yields—it’s about having no better use for the money. Since he can only buy into the world’s largest companies, it’s getting harder to outperform the market.
At Berkshire’s annual meeting in May, he said, “I wouldn’t want to manage $10 billion right now. With $10 million, Charlie and I could probably do well.” This suggests that he is not advising ordinary investors to put their money into Treasury bills.
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