The cash pile of Berkshire Hathaway, founded by renowned billionaire investor Warren Buffett, soared to an astonishing $276.9 billion following a surprise sale of nearly half the company’s stake in Apple Inc.
The total cash pile of Berkshire Hathaway tops Nigeria’s GDP, estimated at N230 trillion or $153.3 billion, assuming an average exchange rate of N1,500/$1.
It also surpasses Nigeria’s external reserves by a whopping 7.4 times, indicative of just how wealthy the company is.
This stark comparison highlights not only the immense wealth of Berkshire Hathaway but also shows the relative poverty of Nigeria, a country with an external reserve and GDP meant to serve over 200 million people.Berkshire Hathaway has approximately 2.4 million shareholders.
With a cash pile of $276.9 billion, this translates to roughly $115,375 per shareholder. In contrast, Nigeria’s GDP per capita is about $765.
This significant disparity further accentuates the vast difference in economic resources available to the average Nigerian citizen compared to the wealth allocated per Berkshire Hathaway shareholder, just one company based in the United States.
Why is Berkshire Hathaway selling
According to reports, the company recently sold about 390 million Apple shares in the second quarter of 2024. This is in addition to the 115 million sold from January to March.
- Berkshire’s quarterly filing disclosed that after reducing its Apple holdings by 13% in the first quarter, the company went on to sell about 49% of its remaining Apple stock in the second quarter.
- However, Berkshire Hathaway still owned about 400 million shares of Apple worth $84.2 billion as of June 30 as the iphone maker’s share price paired major gains to close at 1.29%.
- Data also suggest Berkshire sold a net amount of $75.5 billion worth of stocks three months ending June.
- Berkshire Hathaway has also been systematically reducing its investment in Bank of America, one of the largest banks in the United States. Its stake in Bank of America used to be its second-largest holding after Apple.
As of the market close on Friday, Berkshire’s stake in the bank had been reduced to 12.15%, valued at over $35 billion. The decision to sell came after Bank of America shares surged 75% from their low in late October, prompting Berkshire to begin selling in July.
Why the general frenzy?
The sale has stoked concerns about the United States economy as investor become wary of a likely overvalued stock market.
- Berkshire’s investment actions is seen by many as a sign of Warren Buffet’s bet on financial markets. During Berkshire’s annual meeting in May, Warren Buffett pointed out the challenges of deploying the company’s cash, stressing a preference for low-risk investments with high return potential.
- Thus, investors made a connection after the US stock market fell into correction territory in Friday as investors sold of stocks in droves.
- The Dow Jones Industrial Average (.DJI) dropped by 610.71 points, or 1.51%, to close at 39,737.26. Meanwhile, the S&P 500 (.SPX) fell by 100.12 points, or 1.84%, ending the day at 5,346.56, and the Nasdaq Composite (.IXIC) declined by 417.98 points, or 2.43%, to 16,776.16.
- These declines have pushed the Nasdaq Composite down more than 10% from its July closing high, confirming that the index is in correction territory amid growing concerns about overvalued stocks in a weakening economy.
The S&P 500 also closed at its lowest point since June 4. Both the S&P 500 and the Dow Jones experienced their most significant two-day declines since March 2023.
Tinubu $1 trillion economy
Berkshire Hathaway’s $276.9 billion cash pile stands in stark contrast to Nigeria’s economic metrics.
- This sum not only surpasses Nigeria’s GDP, estimated at N230 trillion ($153.3 billion at an exchange rate of N1,500/$1), but also dwarfs Nigeria’s external reserves by a factor of 7.4.
- Additionally, the Nigerian Exchange (NGX) market capitalization is just N55.4 trillion, or about $36.9 billion, highlighting the disparity between Nigeria’s stock market size and Berkshire’s financial resources.
- President Bola Tinubu’s goal to achieve a $1 trillion economy is ambitious in this context.
While the current figures show significant challenges, they also highlight the potential for growth.