🎙️ Buffett's Patience

[5 minutes to play] Plus: Convenience store consolidation looms

By Matthew Gutierrez and Shawn O’Malley

Tuesday is Election Day in America, and many traders are preparing for a long Election night. Some will watch margins and tweak their wagers until sunrise Wednesday.

That won’t be us. All we know for sure is the historical data. The S&P 500 usually closes out presidential election years in the green. For all election years since 1990, the median gain has been 3.9%. It’s been positive six out of eight times.

 â€” Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

  • Buffett slashes more Apple, adds to cash pile

  • Why convenience store consolidation looms

This, and more, in just 5 minutes to read.

POP QUIZ

Due to soaring home prices and relatively high interest rates, the average age of homebuyers in the U.S. reached a historic high of what age? (Scroll to the bottom to find out!)

Chart(s) of the Day

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In The News

💸 Berkshire Hathaway Slashes More Apple, Adds to Cash Pile

Berkshire Hathaway’s cash pile now exceeds $300 billion as Warren Buffett and Co. kept selling stocks while holding off on buybacks. 

Buffett’s conglomerate has $325.2 billion in cash, up from $276.9 billion last quarter. That cash position is a record, although it’s worth noting that percentage-wise, it’s only slightly above the company’s historical average.

Buffett sold large portions of his big equity holdings in Apple and Bank of America. It’s the fourth consecutive quarter he’s trimmed his Apple stake. He’s also reaped over $10 billion from selling Bank of America shares. The 94-year-old sold $36.1 billion of stock in the third quarter as stocks continued to march to new highs. 

Patience pays: Berkshire ended September with $69.9 billion of Apple shares, meaning it sold about 25% of the 400 million Apple shares it had. Berkshire held about 900 million Apple shares at the end of last year. Apple, up ~20% year-to-date, remains Berkshire’s largest stock holding by a wide margin. 

  • Buffett has made big profits on Apple since first buying shares in 2016. He recently called it “an even better business” than longtime holdings American Express and Coca-Cola. However, he may continue to trim the position to diversify his holdings because he doesn’t think the iPhone maker will keep growing rapidly.

  • “It’s trading at a price at which Warren determined the economics don’t merit as big of a position as it was,” one analyst noted. 

Berkshire also didn’t repurchase any company shares amid the selling spree. Buybacks have slowed down after Berkshire shares reached new highs this year, up 22% and slightly outperforming the S&P 500.

From The Wall Street Journal

Why it matters:

Berkshire will buy back stock when Buffett “believes that the repurchase price is below Berkshire’s intrinsic value, conservatively determined.” Berkshire also crossed the $1 trillion market cap threshold this year. 

For its third-quarter earnings, Berkshire’s operating earnings—including profits from the conglomerate’s fully owned businesses—hit $10.1 billion, down about 6% because of weak insurance underwriting. That was below expectations, leading to a minor selloff on Monday. 

  • Buffett is sitting on a healthy amount of cash, ready to pounce on a new opportunity if it presents itself. He has so much cash that he could theoretically buy every single NFL team and still have money left over.

  • “He’s patient enough to wait for better prices,” an analyst said. “The same goes for buying Berkshire shares.”

Top heavy: Another analyst pointed out: “Between the heavy sales of Apple and Bank of America — which we already knew about — the value of Berkshire’s top five stock holdings as a percentage of total investments in equity securities dropped to 70%. That’s down from 79% at the end of last year. The portfolio is less top heavy than before, though still heavily concentrated in the top names.”

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💰 IRS announces 401(k) contribution limits for 2025

🤖 Nvidia replaces Intel on the Dow index in AI-driven shift for semiconductor industry

🏪 Convenience Store Consolidation Looms

What’s your go-to convenience store? 

For big chains, “the road to growth is anything but convenient,” The Wall Street Journal’s Jinjoo Lee reports

The U.S. convenience store industry may see some consolidation soon as major players pursue acquisition strategies. For starters, the second-largest owner wants to buy the largest. 

Whether or not that deal goes through, there will likely be more mergers and acquisitions. 

  • It’s still a relatively fragmented industry. The 10 largest convenience store chains hold less than 20% of the market share, but single-store operators dominated in the early 2000s before peaking in 2017. About 60% of convenience stores are still independently owned, but more mom-and-pop, single-store operators are closing their doors.

  • Alimentation Couche-Tard (Circle K's owner) is attempting to acquire Seven & i (7-Eleven's parent company). If successful, the combined entity would have ~ a 12% market share, which is hardly overwhelming. 

M&A business: However, M&A (mergers and acquisitions) activity is key for convenience-store giants. Building new gas stations is time-consuming and involves extensive permitting. Generally, fuel is a low-margin business with declining long-term prospects, especially as hybrid vehicles and EVs proliferate the roads. Food offers higher margins, but success is limited to a few chains like Wawa, which has a large following thanks partly to its popular hoagies. 

Seven and i continue to bet on M&A. The company said it acquired over 7,000 stores in the U.S. since 2006 and has roughly $10 billion in cash to keep acquiring. It’s willing to pay high multiples on large deals in the right places.

From The Wall Street Journal

Why it matters:

The convenience store shakeup matters beyond where you grab your coffee and gas. The stores — about 152,396 convenience stores are operating in the U.S. — are often key infrastructure in many communities, especially rural areas where they might be the only nearby source for essentials. 

As independent operators fade and chains consolidate, the character and offerings of such stores could change dramatically. While bigger chains might bring more consistency and modern amenities like EV charging, they could also mean less local character and fewer stores catering to specific neighborhood needs.

The trend also reflects broader shifts in American retail and transportation. As we move toward electric vehicles, these stores must reinvent themselves beyond the gas pump. Their evolution will shape how we fuel up and how we shop, eat, and gather in our communities. 

Look ahead: The path to consolidation in the industry could also provide a blueprint for how other retail sectors adapt to changing consumer habits and technology.

Quick Poll

Which service would you most want to see added to convenience stores near you?

Login or Subscribe to participate in polls.

On Friday, we asked: Would you consider investing in an index tied to sports league? Why or why not?

— Just over half of investors said they wouldn’t consider an index tied to sports leagues. Some noted the high minimum ($250,000) as a deterrent, while others said they expected a higher return with the S&P 500. “I prefer a more broad-based index which has consistently beat the pros over the long term,” one wrote.

— Another wrote: “This is another form of hype investing that always seems to occur at market tops. It's a way of duping the less-aware into fantasies that they think are real investments.”

— One investor considering the sports index said it’s “uncorrelated and less volatile while outperforming the S&P 500 over the last 60 years.”

TRIVIA ANSWER

The average age of homebuyers is now 56, up from 49 in 2023, according to the National Association of Realtors’ annual state-of-the-market report released Monday. That’s a historic high, up from an average age in the low-to-mid 40s in the early 2010s.

See you next time!

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