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Why is Warren Buffett selling billions more in stock?

A man in a suit and tie and glasses, Warren Buffet, smiles. (Source: AP)
Warren Buffet's net worth is estimated at US$104.6 billion. (Source: AP)

US billionaire investor Warren Buffett has been on a selling spree of late, offloading another US$2 billion in stock for the fourth consecutive quarter.

The sales have come mainly from banks, insurance and financial investments, rattling the market.

Previously, sales came from General Motors Co, and some pharmaceuticals.

So is there a strategy behind all this?

Who is Warren Buffett?

Buffett, 91, is a businessman and philanthropist, and is one of the most successful investors in the world.

He was born in Nebraska and attended Columbia Business School and, later, the New York Institute of Finance before he started multiple businesses.

He later focused on investing and became a millionaire in 1962. His net worth is estimated at US$104.6 billion.

Despite this, he is known to live a relatively modest lifestyle and has pledged to give away 99 per cent of his wealth.

Is he selling them personally?

No, the shares were sold through his company, Berkshire Hathaway Inc, of which Buffett is CEO.

Thanks to the company’s recent selling spree, its cash reserves have swollen to a record US$149.2 billion.

Does this mean anything?

It very well could. The last time Berkshire Hathaway sold so much stock was in 2008, which was just before the global economy crashed, sending Wall St to the wall.

Berkshire Hathaway’s net selling spree could signal what it views as weakness in the market or that they’ve simply struggled to find good bargains at a time when the stock market has hit all-time highs.

Buffett is known for liking a deal and he could be freeing up cash to swoop in for an acquisition in the near future.

Could he sell more shares in the near future?

Possibly. Berkshire Hathaway Inc certainly has many, many more shares to play around with.

Despite freeing themselves of US$7 billion worth of shares over the past nine months, that only represents about 2.2 per cent of the company’s stock portfolio.

Is this a sign of a bear market to come?

Buffett is an astute investor and his decisions certainly catch the eye of the market, but whether it’s a sign of another financial crisis or simply a coincidence is yet to be seen.

The market, and economy overall, may also face challenges as multiple countries mount their COVID-19 recoveries, and businesses prepare for the speculated ‘Great Resignation’.

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