Key Points:

• Buffett sold large stakes in Bank of America and Apple, boosting his cash reserves.
• He may focus on investing in the insurance sector, especially Chubb.
• Likely waiting for a market dip to make strategic investments.
• As good as Buffett is, so far he’s overlooked ‘The Next Nvidia’. See what all the excitement is about by clicking here now

Doug and Lee discuss Warren Buffett’s recent sale of Bank of America (NYSE: BAC) and Apple (NASDAQ: AAPL) shares, leaving him with a significant amount of cash, over $250 billion. They speculate on where Buffett might deploy this capital, with a focus on his historical preference for the insurance industry. They consider the possibility that he might make a significant move into Chubb (NYSE: CB), a leading insurance company, rather than venturing into industries he doesn’t fully understand, like commercial aviation. They conclude by noting that Buffett’s patient approach likely means he’s waiting for a market downturn to make his next big investment move.

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Edited Video Transcript:

Yeah.

Now, Warren Buffett has been selling Bank of America, selling Apple, sitting on, you know, what, two hundred and fifty billion dollars in government paper.

Probably back near that two seventy five since the most recent sale, despite the Ulta purchase.

So you’ve got you’ve got all this money.

You know, Buffett, nothing’s ever burning a hole in his pocket because he’s a he’s a patient investor, but he’s going to deploy a lot of that capital.

Yes.

I mean, what’s your thinking about where some of that money goes?

Well, I read an interesting article by a really smart guy.

Named Jim Sloan and his, his premise is that, and you know, Buffett’s been a big insurance guy.

I mean, that’s some of his biggest positions and, you know, insurance companies, you know, you have to have it, but you hate them, you know?

And he had a position once in a company called Markel.

Do you remember these guys, Markel?

They were run by a really bright guy and they did, you know, really esoteric insurance, like, you know, insurance for shipping and insurance for guarding against natural disasters and things of that nature.

And a couple of years ago, and I had really never heard of them.

I looked about their trades over a thousand dollars a share.

And it’s sort of like a Berkshire because they have all the insurance business.

Plus they have a blue-chip stock portfolio.

But at one point, the stock was doing extremely good, and then Buffett sold all of it, which was interesting considering it’s right in the crosshairs of what he likes to own.

And then when the CEO was questioned about things like that, he said, oh, I really can’t comment on why Buffett has sold stock.

And this was a while ago.

But it was this writer’s thought that he’s moving the pile in to maybe go all in on Chubb.

And not having another, and I guess the point being to not be too over skewered to publicly traded insurance companies that he couldn’t get the deal done.

Listen, every rumor in the world about what Buffett’s going to do with his money is on the chat boards, Twitter, all of it.

There are people even speculating maybe he’d get into Boeing because, you know, you get in cheap because they’ve got a new CEO and they’re going to fix their problems.

But I think the reason that I like your theory is Buffett does not understand commercial airplane.

No.

Neither does Boeing, clearly.

And neither do they.

But he’s always liked to buy things that he can understand.

Financial services companies are things that he’s understood these things for sixty years.

Yep.

So if I had to gamble and guess where the money goes, I think the money goes more in the direction you’re talking about than into a speculative, you know, mega cap company that he hopes gets turned around.

Yeah, because number one, at age ninety four, turnaround issues are probably not right up there on his dance card.

And more importantly, when you think about other deals that he did, like when he, when he bought Allegheny and when he bought, you know, he’s owned Geico for since the nineties.

Yeah.

He, he loves insurance because you know, face it, it, it, it is the most damnable industry in the world because you can’t afford not to have it.

And if you take the risk of not having it, you know, you know, buyer beware and good luck.

And, you know, insurance works on actuarial tables.

They know exactly what they’re going to have to pay unless they’re not a reinsurer that’s worried about taking care of damages from a hurricane or something of that nature.

I think he would, and even if he didn’t buy at all, I bet he wouldn’t be opposed to owning the majority of it.

Right.

No.

Well, he could deploy capital on any given day.

So we’ll come back to this.

The next time that there’s actually news that he’s written, somebody had checked for something.

He’s been very patient.

If you look at what he’s done, you know, every day somebody says the market’s going to go down.

At some point the market is going to go down.

And I think that’s when you watch him.

Yeah, I think you’re exactly right.

And I think, you know, I mean, it’s been a big run for the last two years.

I mean, this whole bull market stretch, you know, really started with the AI Microsoft stuff in, you know, a couple of years ago.

And that really kind of gave the boost to the AI trade.

Because again, most of this big market move has been magnificent seven tech stocks, the four hundred ninety three stocks in the S&P five hundred that aren’t there.

You know, some are trading above their, you know, two hundred day average and some have had a solid year.

But boy, nothing like we’ve seen over the last two years.

And if Buffett gets his opportunity to go in and swoop in and buy a ton more Chubb at a discounted price, you can bet he’ll do it because it’s the creme of the creme.

All right.

The next time he writes a check, we’ll come back.

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