OMAHA, Neb. – In a surprising turn of events, billionaire investor Warren Buffett has significantly reduced Berkshire Hathaway’s stake in Apple, raising concerns about potential ramifications for the broader stock market amid a backdrop of negative financial news.
Just two years ago, Buffett categorized Apple as one of the cornerstones of his business empire, alongside Berkshire’s insurance, utility, and BNSF railroad operations. His previous confidence led investors to believe that he would maintain his substantial investment in Apple, much like his long-held shares in Coca-Cola and American Express.
However, Buffett has been actively trimming his Apple holdings over the past year, and recent sales included stock reductions in Bank of America and the Chinese electric vehicle maker BYD, coupled with minimal buying activity. Consequently, Buffett’s cash reserves have ballooned to approximately $277 billion, up from an already record-setting $189 billion just three months prior.
Market analysts are expressing concern over these developments, especially in light of lackluster earnings reports from the technology sector, disappointing job statistics, and ongoing uncertainties surrounding interest rates. An analyst at Edward Jones noted, “This could alarm the markets given the recent negative news.”
Buffett has previously praised Apple CEO Tim Cook, highlighting consumer loyalty to iPhones. Earlier this year, Buffett trimmed more than 10% of Berkshire’s Apple stake, selling over 116 million shares, but the recent reduction marked a major shift.
Despite these sales, tech analyst Dan Ives emphasized that Buffett remains a strong supporter of Apple, asserting that the reductions should not signal impending negative news, as Apple continues to be Berkshire’s largest investment, significantly outpacing its holdings in Bank of America.
Ives indicated that the current tech sell-off may merely be a minor distraction from the long-term growth trajectory of the industry.
While Berkshire did not disclose the specific number of Apple shares held in its latest report, the investment was valued at $84.2 billion at the end of the second quarter, despite shares reaching heights of $237.23 over the summer. The value of Berkshire’s Apple stake was $135.4 billion at the end of the first quarter.
Analyst Cathy Seifert noted that the sale could be interpreted as prudent portfolio management, given that Apple had become a disproportionately large part of Berkshire’s investments, suggesting that Buffett may be bracing for an economic downturn. “This is a company girding itself for a weaker economic climate,” she remarked.
Berkshire recently reported a slight decline in its overall earnings due to a drop in the paper value of its investments, earning $30.348 billion, or $21,122 per Class A share, in the second quarter—down from $35.912 billion, or $24,775 per Class A share, a year earlier.
Buffett has long advised investors to focus on Berkshire’s operating earnings, which provide a clearer picture of the company’s performance by excluding volatile investment gains and losses. By this measure, operating earnings surged more than 15% to $11.598 billion, or $8,072.16 per Class A share, compared to $10.043 billion, or $6,928.40 per Class A share, last year. The performance was largely driven by improvements in Geico’s results, while other segments sensitive to economic fluctuations struggled.
Overall, Berkshire Hathaway’s performance exceeded the expectations of analysts, solidifying its position in various sectors, including insurance, railroads, utilities, and a diverse portfolio of retail and manufacturing brands.
