Warren Buffett has built a legendary reputation as one of the most successful investors in history, with a remarkable track record to support his acclaim. Taking the helm of Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) in 1965, he has achieved a compound annual return of 19.8% for shareholders. Embracing his partner Charlie Munger‘s philosophy of investing in outstanding businesses at fair valuations, Buffett has cultivated a conglomerate of wholly-owned subsidiaries and equity holdings within Berkshire Hathaway.

Like all major institutional investors, Berkshire Hathaway is mandated by the Securities and Exchange Commission to disclose its equity portfolio publicly every quarter through form 13F filings. Monitoring Buffett’s investment decisions can offer valuable insights and potential investment opportunities.

In the third quarter, the Oracle of Omaha made significant adjustments to the portfolio. While selling shares in Apple and acquiring a stake in Chubb, he also bolstered Berkshire’s positions in Occidental Petroleum and Liberty Media. However, two of Buffett’s most substantial purchases for Berkshire remain undisclosed in the portfolio, requiring a deep dive into the latest quarterly earnings report to unveil his strategic investments.

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Buffett Reinforces His Favorite Stock

For 23 consecutive quarters since mid-2018, Warren Buffett has consistently invested in a single stock, dedicating $2.6 billion towards repurchasing shares of Berkshire Hathaway last quarter. This exceeded his investments in any individual stock during the previous quarter. (Note: Combined purchases of Class A and Class C shares of Liberty Media surpassed $2.6 billion.)

The board of directors revised Berkshire’s share buyback program in 2018, empowering Buffett to repurchase shares below their intrinsic value as long as a minimum of $30 billion in cash was maintained on the balance sheet. Buffett’s buybacks in Berkshire stock overshadow his equity investments over the past six years, increasing shareholders’ ownership in all Berkshire assets, including core operations, the railroad business, the equity portfolio, and other cash-producing ventures.

Buffett’s strategic decision on Berkshire stock has proven immensely lucrative for shareholders, with current share prices near an all-time high. This indicates that Buffett secured favorable deals on prior purchases, making the stock still attractive at around 19 times forward earnings estimates. Stripping out cash and equity investments, core operations are valued at just $322 billion, less than 9 times the previous year’s core operating earnings.

It’s a safe bet that Buffett will persist in buying back stock, enabling remaining shareholders to expand their share of Berkshire’s profits in return.

Buffett Boosts His Top Holding by Over $21 Billion

Although Apple is commonly perceived as Buffett’s primary investment within Berkshire Hathaway, another asset has emerged as the top holding over the past year. With approximately $189 billion in cash and Treasury bills on Berkshire’s balance sheet, the Apple stake approximately amounts to $150 billion.

In the recent quarter, Buffett continued to augment his Treasury bill holdings, divesting some Apple shares and reallocating proceeds to acquire more Treasuries. The balance swelled by over $21 billion, factoring in stock sales and cash flow from core operations.

Buffett opts for Treasury bills as a temporary cash repository while scouting for lucrative business or stock investments. Typically maturing within one year, these U.S. government bonds provide flexibility due to their expedited maturity. Presently, Buffett benefits from anticipated lower future interest rates, yielding a higher return on his short-term government debt compared to longer-dated bonds.

Undeterred by high interest rates, Buffett’s reluctance to find compelling investment prospects led him to boost Treasury bill holdings rather than risking capital in the current market scenario. Despite accumulating a sizable Chubb stake in recent quarters, valued at approximately $6.9 billion, Buffett faces the challenge of identifying an investment substantial enough to have a significant impact on Berkshire, now ranked as the seventh-largest publicly traded company.

While Buffett’s Treasury bills remain hidden from Berkshire’s official portfolio, their mounting presence demands investor attention, requiring a substantial shift in market dynamics for Buffett to deploy the burgeoning cash reserves effectively.

Is Investing $1,000 in Berkshire Hathaway a Wise Choice?

Prior to purchasing Berkshire Hathaway stock, it’s crucial to contemplate the following:

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