Warren Buffett holds record $189 billion in cash
The top ten most influential finance and tech news stories of the week
Welcome to this week’s edition of The Pilane Capital Newsletter. Each week I highlight the top ten most influential global tech news stories on large-cap tech investing, the macro economy, and managing your portfolio.
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Berkshire Hathaway holds record $189 billion in cash
In its Q1 report, Berkshire Hathaway reported that its Apple position was worth $135.4 billion implying a decline of approximately 13% in the stake, the second quarter in a row that CEO Warren Buffett has trimmed the stake in the iPhone maker. Paramount stock was completely sold at a loss in the quarter to which Buffett remarked with customary frankness “I was 100% responsible for the Paramount decision”. Berkshire’s cash hoard has reached a record high of $188.99 billion, up from $167.6 billion in the fourth quarter signalling Buffett’s inability to find acquisitions and stocks trading at high multiples.
Apple sales fall, announces largest buyback in stock market history
Sales fell 4% and iPhone sales fell 10% year over year during its fiscal second quarter. Apple iPhone sales account for 50% of its revenue. The firm announced that its board had authorized $110 billion in share repurchases, a 22% increase over last year’s $90 billion authorization. It’s the largest buyback in history. EPS: $1.53 v $1.50 estimated, revenue: $90.75 billion vs. $90.01 billion estimated. CEO Tim Cook remarked that sales would grow in the “low single digits” during the June quarter.
The Fed holds rates steady
The Fed has kept rates steady in its latest Federal Open Market Committee meeting this week. The federal funds rate has been between 5.25%-5.50% since July 2023, but the Federal Open Market Committee voted to ease the pace at which it is reducing bond holdings on the central bank’s balance sheet. “The Committee does not expect it will be appropriate to reduce the target range (rates) until it has gained greater confidence that inflation is moving sustainably toward 2 per cent”.
Amazon earnings: cost cuts are working
Amazon beats on revenue and earnings for Q1 from growth in advertising and cloud computing. Earnings per share: 98 cents v 83 cents expected, revenue: $143.3 billion v $142.5 billion expected, up 13% from a year ago. Ad revenue climbed to $11.8 billion in the first quarter from $9.5 billion a year earlier. Operating income increased 200% in the period to $15.3 billion in the latest sign that the company’s cost-cutting measures and focus on efficiency are working: Amazon has laid off more than 27,000 employees since late 2022.
Coinbase reports first-quarter revenue beat
Earnings came in at $4.40 per share v $1.09 estimates. Revenue hits $1.64 billion v $1.34 billion expected. The increase in revenue coincided with the rally in the price of Bitcoin which hit a new all-time high above $73,000 in March. Revenue from its stablecoin USDC increased 15% this quarter from the last to $197 million. It added in its shareholder letter that USDC has been the fastest-growing stablecoin in 2024. March also saw a judge rule that its claim that the cryptocurrency exchange engaged in unregistered sales of securities could be heard by a jury at trial.
Samsung beats estimates
Samsung Electronics, the world’s largest memory chip maker, said operating profit jumped 932.8% in the first quarter ending March. Revenue came in at 71.92 trillion Korean won (about $52.3 billion) v 71.04 trillion expected. Operating profit was 6.61 trillion Korean won v 5.94 trillion expected. This came on the back of ‘strong sales of flagship Galaxy S24 smartphones and higher prices for memory semiconductors’. Earlier this month, the Biden administration agreed to grant Samsung up to $6.4 billion of funding to create new manufacturing capacity to produce chips in Texas.
AMD earnings beat expectations
AMD Q1 results: earnings per share: 62 cents v 61 cents expected, revenue: $5.47 billion v $5.46 billion expected. Its chips rival that of NVIDIA but are in no way comparable in terms of sales: AMD expects to make $4 billion in 2024 AI chip sales, whilst Nvidia reported $18.4 billion in sales — mostly AI chips — for Q1 of this year alone. Nvidia is our largest position.
Coinbase is lowering the cost of Bitcoin transactions
Coinbase has rolled out support for the Lightning Network enabling instant, low-cost Bitcoin transfers. Users will have the option to choose between using Lightning for faster and cheaper Bitcoin transactions or processing their transactions on the traditional Bitcoin network. With the Lightning Network, the cost of sending BTC globally is 20 times less than the average 2% charged on credit card transactions and a fraction of the $30 paid for wire transfers.
Real-world asset tokenization got another boost
Blackrock led an investment of $47 million into Securitize it was announced this week. Securitize is the world’s leading web3 firm that tokenizes real-world assets (RWAs). Hamilton Lane, ParaFi Capital and Tradeweb Markets were also in the round.
Stablecoin Tether hits all-time high
Tether tallied an all-time high net profit of $4.52 billion in the first quarter, according to a Wednesday attestation report by auditing firm BDO. Tether’s first quarter net operating profits of $1 billion were driven by its US Treasury holdings, the company added. Other profits stemmed from mark-to-market gains in its bitcoin and gold positions.
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Weekly stats up to 3rd May:
Pilane Capital Technology Growth Index (PILTECHX): 1.49%
S&P 500 (SPY): 0.60%
NASDAQ 100 (QTEC): -0.67%
Year-to-date stats up to 3rd May:
Pilane Capital Technology Growth Index (PILTECHX): 26.85%
S&P 500 (SPY): 8.85%
NASDAQ 100 (QTEC): 7.48%
The portfolio is benchmarked against the SPDR® S&P 500® ETF Trust (SPY), and the First Trust NASDAQ-100-Technology Sector Index Fund (QTEC).
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