Warren Buffett Cuts Berkshire Hathaway’s Apple Stake by Almost 50%
Warren Buffett's Berkshire Hathaway has significantly reduced its Apple stake, cutting it by almost 50%.
Warren Buffett’s Berkshire Hathaway has significantly reduced its Apple stake, cutting it by almost 50%. This move has contributed to the company’s cash pile reaching a record $276.9 billion in the second quarter, as reported by Bloomberg.
Berkshire’s second-quarter operating earnings have risen to $11.6 billion, up from $10 billion in the same period last year. The conglomerate sold $75.5 billion worth of stock on a net basis during the quarter.
Buffett’s Strategic Approach:
At the annual shareholder meeting in Omaha in May, Buffett emphasized that the firm was not in a rush to spend its cash unless it found opportunities with very little risk and high potential returns.
This strategic approach comes two years after Buffett described Apple stock as one of the four giants of his business, alongside Berkshire insurance, utility, and BNSF railroad businesses.
Reduction in Apple Stake:
Despite previously indicating a long-term hold on Apple shares, Buffett has reduced Berkshire’s Apple stake over the past year. The conglomerate recently sold a portion of its stock in Bank of America and Chinese electric vehicle maker BYD.
The reduction in Apple’s stake is substantial, with more than 10% of the stake sold in the first quarter of this year alone, amounting to over 116 million shares.
Current Holdings and Market Impact:
Even after the sales, Berkshire’s Apple investment was worth $84.2 billion at the end of the second quarter, despite Apple’s shares soaring over the summer. At the end of the first quarter, Berkshire’s Apple stake was valued at $135.4 billion. Analysts estimate that Berkshire still holds about 400 million Apple shares.
Market Concerns and Future Outlook:
The substantial cash pile of nearly $277 billion, up from $189 billion just three months earlier, coupled with recent market conditions, could cause market alarm. Last week’s weak tech earnings, a disappointing jobs report, and uncertainty about future interest rates add to the concerns. Edward Jones analyst Jim Shanahan noted that these developments could unsettle the markets.
Despite the reductions, Buffett has consistently praised Apple’s CEO Tim Cook and the strong customer loyalty to iPhones. However, the drop in the paper value of Berkshire’s investments led to a small decline in its bottom-line earnings.
