Warren Buffett turned to cash in Q4! What’s he doing now?

Warren Buffett is one of the most famous investors in the world. He has accumulated a fortune of more than $100bn – as of November 2022 – and his value investment strategy is analyzed and copied all over the world.

He was led Berkshire Hathaway more than five decades, transforming the holdings company into one of the most valuable organizations in the world. As such, many investors are eager to see the company’s quarterly reports, looking for insight into what the ‘Oracle of Omaha’ is investing in, and what it is avoiding.

A danger

In the Q4 results published in February, some investors realized that Buffett had increased the company’s position in cash, cash equivalents, and treasury securities.

That worries many investors because Buffett sees himself as a net buyer of stocks. He invested in “big company” when he believes the price is attractive. Buffett tends to hold stocks for very long periods of time, and only sells when the companies are trading in line with or above their fair value.

So, when Berkshire Hathaway’s cash, cash equivalents, and treasury securities increased from $105.4bn to $128.7bn, between June 30, 2022 and the end of the year, many investors thought that a market correction was coming.

And that’s what happened – although it may not have happened as anticipated. Silicon Valley Bank collapsed when it had to sell bonds at a loss as tech sector savers withdrew capital. This sent a shock wave through the market and stocks tanked – in most cases it is not guaranteed.

How are you now?

We won’t know whether Buffett has invested or avoided until the Q1 data is released in the coming weeks. But what we do know is that Buffett entered the quarter with $128.7bn worth of cash, cash equivalents and treasury securities.

We also know that Buffett is a value investor, and it can be easier to find attractively priced stocks when prices are down. Buffett is known to look for a margin of safety above 30% – this means that the book or intrinsic value of the stock is higher than the market value.

I could be wrong, but I expect Buffett to take the opportunity to buy some of his favorite stocks at a lower price. The billionaire has previously noted that he is thrilled when prices drop because he can buy more companies he trusts.

It is important to note that not all stocks have ended up in value. Some favorites, including Coca Cola, west, and Applehas been pushed up over the month.

But there are other holdings like Bank of America, has slumped. The banking giant is down 17% for the month and 27% for the year. Buffett may see this as an opportunity to buy more stocks that he believes in.

What does this mean for me? Well, Buffett doesn’t invest much in the UK and I don’t invest much in the US. But by following my investment strategy, I was able to invest more in some of my favorite stocks that have suffered over the past month.

Barclays it’s one that I’m topping up on. Discounted cash flow calculations show that it could be discounted by as much as 75% after the March slump.