Warren Buffett took control of Berkshire Hathaway in 1965. In the subsequent decades, the company evolved from a small textile mill into a multinational conglomerate with subsidiaries across insurance, retail, utilities, manufacturing, and freight rail transportation.
Under Buffett, Berkshire Class A stock increased 6,100,000%, while the S&P 500 (SNPINDEX: ^GSPC) returned 46,100%. But Buffett stepped down from his position as CEO in December 2025, handing the reins to Greg Abel, who had previously served as CEO of Berkshire Hathaway Energy.
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During his first quarter at the helm, Abel delivered a $397 billion warning. Here’s what investors should know.
Berkshire Hathaway was once again a net seller of stocks despite a record cash position
One of the most important aspects of Berkshire’s business is its stock portfolio. Like many insurance companies, Berkshire uses cash flows from underwriting policies to buy stocks as a means of driving long-term capital appreciation. Its portfolio is currently worth $327 billion, which accounts for a large portion of its $1 trillion market capitalization.
For decades, investors closely watched Berkshire’s portfolio to learn what stocks Warren Buffett was buying and selling. Interestingly, he was actually a net seller of stocks during his final 13 quarters as CEO, meaning the value of stock Berkshire sold exceeded the value of stock purchased in every quarter since the current bull market began in Q4 2022.
That trend continued under Greg Abel in Q1 2026. Berkshire reported $8 billion in net stock sales, bringing the streak to 14 straight quarters. But the real warning lies in the company’s record cash position. Berkshire reported $397 billion in cash and equivalents in Q1 2026, meaning it was a net seller despite having plenty of investable capital.
The most logical explanation is that Abel (and investment manager Ted Weschler) struggled to find stocks at attractive valuations in the current market environment. Indeed, the S&P 500 currently trades at one of its most expensive valuations on record, and history says the index could fall sharply in the coming years.
The S&P 500 has not been this expensive since the dot-com crash in 2000
The S&P 500 currently has a cyclically adjusted price-to-earnings (CAPE) ratio of 40.1. That is a very expensive valuation. In fact, the S&P 500’s monthly CAPE ratio has not topped 40 since the dot-com crash in September 2000.
