Berkshire Hathaway Inc. (BRK/A)’s cash swelled in the second quarter to its highest level in a year as Chairman Warren Buffett pared bets on consumer-products stocks.

Cash advanced 7.5 percent to $40.7 billion in the three months ended June 30, the Omaha, Nebraska-based company said in an Aug. 3 regulatory filing. Berkshire was a net seller of equities in the quarter as it cut its allocation to companies that make and distribute consumer goods while boosting holdings of financial firms and a group called “commercial, industrial and other.”

Individual stocks weren’t listed in the filing.

“Why keep his old names that served a purpose for a while and have gone up,” Tom Russo, a partner at Berkshire investor Gardner Russo & Gardner, said in a phone interview. Some of the consumer stocks “have various forms of blemishes.”

Buffett, 81, has cited challenges at consumer-products firms in Berkshire’s $86.2 billion stock portfolio, including Johnson & Johnson (JNJ), Procter & Gamble Co. (PG) and Kraft Foods Inc. (KFT) The billionaire has used his cash to build the largest stakes in firms including Wells Fargo & Co. and to expand Berkshire
through acquisitions.

He has said he looks for one good buyout idea annually and told investors at his May shareholder meeting that he couldn’t come to an agreement on a potential acquisition valued at about $22 billion. Berkshire hasn’t struck a deal larger than $1
billion since its 2011 purchase of engine-additives maker Lubrizol Corp. for about $9 billion.

The extra cash adds to the ability to make an acquisition on-par with Berkshire’s largest takeover, the 2010 purchase of railroad Burlington Northern Santa Fe for $26.5 billion, said Buffett biographer Andrew Kilpatrick.

Source: Berkshire’s Cash Hoard Swells as Buffett Pares Consumer Stocks – Bloomberg