Is Warren Buffett preparing for a great buying opportunity in the stock market?

Typically, Warren Buffett, the chairman of Berkshire Hathaway (NYSE: BRK.A) and renowned investor, is known for seeking valuable additions to his portfolio from the stock market. 

However, in 2024, Buffett’s attention has shifted towards selling, as evidenced by the recent updates to his portfolio.

In the latest quarterly report released on February 24, Berkshire Hathaway’s cash reserve surged to $167.6 billion in the fourth quarter. This increase reflects the conglomerate’s difficulty finding appealing deals at reasonable valuations.

Additionally, the company reported fourth-quarter operating earnings of $8.48 billion, up from $6.63 billion in the same period the previous year. This growth was supported by higher insurance underwriting earnings and investment income, driven by increased interest rates.

What could Buffett’s next stock acquisition be?

In his annual shareholder letter released alongside the company’s results on Saturday, Buffett noted that only a few companies in the country can significantly impact Berkshire. 

He stated that Berkshire and others have thoroughly examined these companies. Buffett also mentioned that outside of the US, there are no viable options for capital deployment at Berkshire. 

However, Warren Buffett’s preferred Japanese trading houses experienced gains after he mentioned in his investor letter that these companies adhered to shareholder-friendly policies he deemed “superior” to those practiced in the US. 

Marubeni Corp. (TYO: 8002) saw its largest increase in four months, surging as much as 5.6% on February 26.

Similarly, the other four trading companies held by Berkshire Hathaway Inc.—Mitsubishi Corp., Itochu Corp., Mitsui & Co., and Sumitomo Corp.—also saw rises, outperforming the broader market. 

Buffett is likely to bolster his investments in these companies as they are still undervalued, and there is room for growth before reaching Berkshire’s declared maximum stake limit of 9.9%.

While his home turf might not look appealing, the sage of Omaha could soon move his interest overseas, particularly to Japan, where the Nikkei continues to post record highs.

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