Warren Buffett Is Buying Shares of This Legal Monopoly Hand Over Fist

When billionaire Warren Buffett speaks, Wall Street tends to pay very close attention. In his nearly six decades as CEO of Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B), he's overseen close to a 5,600,000% cumulative return in his company's Class A shares (BRK.A). Few money managers have been able to consistently outpace the benchmark S&P 500 (SNPINDEX: ^GSPC) quite like Buffett.

Though riding the Oracle of Omaha's coattails has been a profitable venture for decades, we've witnessed a discernable shift in Buffett's investing habits over the last two years. Although he's been a decisive seller of equities of late, there is one stock Berkshire's chief can't stop adding to his company's 43-stock, $318 billion portfolio.

Warren Buffett has quietly become a net seller of stocks

Let me preface this discussion by making one thing clear: Warren Buffett is a long-term optimist when it comes to the U.S. economy and stock market. He's repeatedly cautioned investors not to bet against America, and wisely realizes that periods of economic growth handily outlast short-lived recessions.

Despite this rosy long-term outlook, the Oracle of Omaha is also an ardent value investor who's, historically, been unwilling to chase stocks higher when valuations aren't attractive.

Between Oct. 1, 2022 and June 30, 2024, a span of seven quarters, Buffett and his team oversaw close to $132 billion in net stock sales. A majority of this selling activity can be traced to dumping north of 500 million shares of Apple over a three-quarter stretch. However, Form 4 filings with the Securities and Exchange Commission also show that more than $10 billion worth of Bank of America stock was sent to the chopping block since mid-July.

This persistent selling activity from Berkshire Hathaway's brightest investment minds is almost certainly a response to the stock market being historically pricey.

On Monday, the S&P 500 and ageless Dow Jones Industrial Average closed at respective all-time highs. What's more telling is that the S&P 500's Shiller price-to-earnings (P/E) ratio, which is also known as the cyclically adjusted price-to-earnings ratio (CAPE ratio), hit its highest level of the year.

The Shiller P/E is a valuation tool that takes average inflation-adjusted earnings from the previous 10 years into account. This makes it an excellent apples-to-apples measure of value.

As of the closing bell on Oct. 14, the S&P 500's Shiller P/E ratio stood at 37.70, which is more than double its average reading of 17.16, when back-tested to January 1871. This also represents the third-highest reading during a continuous bull market.