# Gates Foundation Just Dumped 2.4M Berkshire Shares — What's the Signal?

Bill Gates' charitable foundation significantly reduced its holdings in Berkshire Hathaway stock last quarter. Although this asset remains the foundation's largest position (25% weight), what signal does it send by cutting from 30% to 25%?

**Two key reasons**:

**1. Buffett is Hoarding Cash** — Berkshire has $380 billion in cash, accounting for one-third of its market value. By historical standards, the entire U.S. stock market is overvalued (S&P 500 price-to-earnings ratio at 30 times, historical average at 15 times). Even Buffett cannot find bargains and can only hold cash to wait for opportunities, which speaks volumes in itself.

**2. Diversify Risk** — If one company accounts for a quarter of the fund's allocation, it seems overly concentrated even if Berkshire itself is highly diversified. Moreover, with Berkshire's stock price reaching an all-time high and a price-to-book ratio of 1.6 times (the ten-year average is 1.2-1.5 times), it does seem a bit expensive.

**What's more meaningful is** — out of the 12 positions in the fund, all 12 are being reduced, with zero increases. This is not just a problem of reducing holdings in one company, but rather a general bearish outlook on market valuations. Both Buffett and Gates are long-term holders, and now they are both pulling back; it’s not so much that they are actively adjusting their portfolios, but rather that they are **cautiously responding to risks**.

Of course, this is a charity fund and not a private account, and the sell-off may simply be to fulfill the charitable mission. However, compared to previous years when the fund was a net buyer, this time's sell-off suggests a hint of market caution.