Warren Buffett will go down as one of the greatest investors of all time. In fact, I think the Berkshire Hathaway (NYSE:BRK-B) CEO is already on the Mount Rushmore of investors, and for good reason.

His investing conglomerate Berkshire Hathaway has exceeded the performance of the S&P 500 by a staggering clip over the course of more than five decades with Buffett at the helm. Investors who put their capital to work with the famed CEO have returned a compounded annual return of 19.8% since 1965, compared to the 10.2% return of the S&P 500. That’s far from not bad – that’s exceptional.

One of the key reasons why Buffett has been so successful over these long periods of time is the willingness of the investing giant to sell stocks when they’re expensive, and buy them near market bottoms. Buffett has always kept a rather high cash hoard on the sidelines, keeping his powder dry so to speak, waiting for buying opportunities. But with a cash hoard of $334 billion driven by high-profile sales of stock last year totaling roughly $134 billion, this billionaire CEO is earning his nickname as the “Oracle of Omaha” right now.

Let’s dive into what to make of Buffett’s cash hoard, and why investors should be paying closer attention.

Big Sales Should Stoke Investor Concern

Buffett’s $134 billion in divestitures last year came in the form of notable stock sales of Apple (NASDAQ:AAPL) and Bank of America (NYSE:BAC), two of Warren Buffett’s core holdings.

Notably, these companies are also what many investors consider to be economically sensitive stocks. When the economy is on a roll, earnings for the consumer discretionary and banking giant tend to rise dramatically. 

But during periods when consumers are tamping down spending, these companies can perform less admirably. In this environment, Buffett has seen fit to slash his Apple stake in more than half, with Apple seeing the largest reduction but remaining the firm’s top position. No Apple shares were sold in Q4, but financial stocks, including Bank of America and Citigroup, saw major cuts. Berkshire also reduced stakes in Capital One and Nu Holdings while maintaining 300 million Apple shares.

His Q1 moves further cemented the idea that we could be in for more pain, with further selling of some of his key positions driving home the idea to investors that recession risks are likely a lot higher than the investment banks are putting forward.

Buffett’s Relationship with Apple Is Complicated 

Berkshire Hathaway reduced its Apple stake by 67% in 2024, cutting holdings from 906 million to 300 million shares, lowering its value from $174 billion to $75 billion. In addition to trimming Bank of America by a whopping 34%, these stock sales have clearly reverberated across the investing community. Those who looked at Apple and Bank of America as two stalwart stocks to buy in any environment are starting to re-think their positions.

I think Buffett’s recent moves have more to do with the valuation multiples of these respective companies than the tax rationale Buffett gave at his last annual meeting. Apple now trades at a lofty price-earnings multiple of 28.5-times, which is actually more expensive than Nvidia’s forward multiple. And given Apple’s historically low growth rate of 2% (which makes sense, given the iPhone maker’s size), it’s clear there are fundamental concerns around what investors should be willing to pay for this name.

That said, given Buffett’s long-standing goodwill with the company, and his willingness to continue to stay invested in Apple over the long-term, his relationship with Tim Cook and the Apple executive team is one he’s not likely to give up completely. Apple is a key holding I think will remain in Buffett’s portfolio. And whatever chips he does have left at the table can now be viewed as cream – his share sales have now taken all of his initial investment off the table, and then some. So, this position has clearly been de-risked, in a big way. 

Will Buffett Eat Into His Cash Hoard?

The next and most obvious question I think investors will be looking to have answered is whether Buffett will indeed begin to put some of his incredible cash hoard back to work. We’ll see. In the past, Buffett has been patient, buying stocks aggressively when no one else is. And I don’t think we’ve hit a true point of capitulation in the market just yet. 

That said, the S&P 500 is now in correction territory. That’s a more than 10% discount Buffett could get by investing today. And with many blue-chip stocks dropping over 15%, a key question is whether Buffett will put some of this massive cash pile to work.

I think Buffett’s approach will be similar to his moves in the past, in which he’s waited for more significant downturns before making big investments. But when he does start buying, I think investors will certainly want to perk up and consider adding to key positions, and potentially taking the Oracle’s advice, and simply buy index funds. That’s what I’ll certainly be paying attention to, and I think most investors should as well. 

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