Warren Buffett's cash fortress Berkshire closes gap with S&P 500 as AI worries depress Wall Street

Core Insights - Berkshire Hathaway's stock has seen gains recently, reducing its underperformance against the S&P 500 from 12.2 percentage points to 4.3 percentage points since October 29 [1][2]. Financial Performance - Operating profits for Berkshire's wholly owned companies increased by 34% to nearly $13.5 billion in Q3, with insurance underwriting income rising by 200% [2]. - The company has not engaged in stock buybacks, indicating that Buffett does not view Berkshire shares as significantly undervalued despite recent weaknesses [2]. - As of September 30, Berkshire's cash reserves reached $381.7 billion, reflecting a 10.9% increase since the end of June [2]. Investment Strategy - There are indications of further sales of Apple shares, with a reported $1.2 billion decline in the cost basis for consumer product stocks, which includes Apple [7]. - Apple remains Berkshire's largest equity holding, valued at $75.2 billion, but the position has been reduced by 69% over the past two years [9]. - The company may have sold approximately 35 million shares of Apple for around $8 billion based on average prices during the quarter [9]. - Bank of America, another significant holding, has also seen a reduction of about 40% since the beginning of last year, with its current value at $32.2 billion [10]. Leadership Transition - Warren Buffett is expected to deliver a final message as CEO on November 10, which may include topics on philanthropy and other matters of interest to shareholders [4][5]. - Buffett will remain as chairman but will not participate in the next annual meeting, with new CEO Greg Abel taking over the responsibility of writing the annual letter to shareholders [5][6]. Market Activity - Berkshire's reported holdings in Japan have increased in value to approximately $33 billion, up from $31 billion in the previous month [11]. - The company has issued warnings regarding fraudulent YouTube videos impersonating Buffett, highlighting concerns over the misuse of AI technology [12].