Berkshire's cash pile could reach $200 billion with Buffett's continued stock sales.

• Berkshire Hathaway is expected to surpass its previous cash reserve record of $189 billion during its second-quarter earnings announcement on Saturday morning.
• Some speculate that Buffett's recent divestment of winning investments in Apple, Bank of America, and BYD indicates that the Oracle of Omaha is concerned about the overheating of the bull market.

Amid CEO Warren Buffett's rare sale of some of his favorite stocks, his highly scrutinized cash pile could top $200 billion — more than the entire annual gross domestic product of Hungary.

Berkshire Hathaway, an Omaha-based conglomerate, is expected to reveal that its cash reserves surpassed the previous record of $189 billion, set in the first quarter, during its second-quarter earnings report on Saturday morning. This announcement comes at a time when Buffett has been selling off successful investments in , and , which has led some to speculate that the Oracle of Omaha is worried that the bull market may have become overheated.

"Bill Stone, the chief investment officer at Glenview Trust Company and a Berkshire shareholder, stated early in the week that it appears as though he wants to reduce the risk in his portfolio slightly. He is cutting two of his top holdings, and banks, being the most economically sensitive, are among them. The market seems confident in a soft landing, but perhaps he is taking a more contrarian view."

For six consecutive quarters, Berkshire has been selling stocks. Notably, Buffett reduced his substantial Apple investment by 13% in the first quarter due to tax reasons, after realizing significant profits. Despite shares of the iPhone maker increasing by 23% in the second quarter, the selling could have continued.

Recently, Berkshire Hathaway has been selling off its Bank of America shares, which is its second-largest holding after Apple. Over the past 12 trading sessions, Berkshire has sold $3.8 billion of BofA shares. This selling began in July and will not be reflected in the second-quarter report.

Buffett's substantial cash reserves have been generating substantial returns due to the increase in Treasury yields over the past two years. However, with interest rates expected to decrease from their multiyear highs, his growing cash pile may once again raise questions. If invested in three-month Treasury bills at approximately 5%, $200 billion in cash would generate around $10 billion annually or $2.5 billion quarterly. Nevertheless, these returns are anticipated to decline once the Federal Reserve starts lowering interest rates.

Andrew Kligerman, TD Cowen's Berkshire analyst, stated in an interview that the length of time Berkshire will hold onto its enormous cash pile is the only question.

'Things aren't attractive'

At Berkshire's annual meeting in May, Buffett, who will turn 94 at the end of the month, admitted that he is considering investing more capital, but the high prices make him hesitant.

"The investment icon stated that it is likely that cash holdings will be approximately $200 billion at the end of the quarter. However, they will only spend the money if they believe a business has minimal risk and the potential for high returns. The investment icon clarified that this is not due to a hunger strike or any other extreme measures, but rather because the opportunities are not attractive."

Weakness in non-insurance

The quarterly results of Berkshire's BNSF Railway and Berkshire Hathway Energy utility business will be closely studied by investors, as both companies have recently shown signs of weakness. BNSF is facing challenges with wage increases and revenue declines, while BHE is under pressure to be held liable for damage caused by wildfires.

The non-insurance side of Berkshire Hathaway will impact the results, whether it's due to slow railroad volumes and higher labor costs or utilities, which may have a decent quarter but won't be exciting due to the liability exposure, according to TD Cowen's Kligerman, who recently started research coverage of Berkshire with a hold rating.

In the first quarter, Berkshire's insurance underwriting earnings increased by 185% year-over-year, making it a bright spot in the company's business.

Berkshire Hathaway's stock has surged more than 21% this year, surpassing the S&P 500's 14% gain, through Thursday. As a result, the conglomerate's market capitalization has soared to $956 billion, bringing it close to the elite group of U.S. companies valued at $1 trillion or more.