Significant Reduction in Apple Holdings
Warren Buffett’s Berkshire Hathaway has made a striking move by slashing its stake in tech giant Apple Stake by nearly 50%, as revealed in its second-quarter earnings report released on Saturday. The conglomerate disclosed that its holdings in Apple were valued at $84.2 billion at the end of the quarter, a sharp drop from 790 million shares to 400 million shares. This significant selloff is noteworthy for Buffett, who is traditionally known for holding onto stocks for extended periods.
Apple did not respond to CNN’s request for comment on the matter. Berkshire Hathaway has previously downsized its stake in Apple, a company with a market cap exceeding $3.3 trillion. In the last three months of 2023, Berkshire sold off 10 million shares of Apple stock, representing about 1% of its holdings in the company. This trend continued in the first quarter of 2024, with a 13% reduction in its stake.
In contrast to the selloff, Berkshire Hathaway reported a record cash pile of nearly $277 billion for the second quarter, up from about $189 billion in cash and equivalents in the first quarter. This massive cash reserve comes as Berkshire sold off $75.5 billion in stock in the second quarter. Besides Apple, Berkshire also reduced its stake in its second-largest position, Bank of America, to $41.1 billion.
Impact and Market Reactions on Apple Stake
The earnings report highlighted that approximately 72% of Berkshire’s aggregate fair value is concentrated in five companies: American Express ($35.1 billion), Apple ($84.2 billion), Bank of America ($41.1 billion), Coca-Cola ($25.5 billion), and Chevron ($18.6 billion). For some, Berkshire Hathaway’s significant reduction of its Apple stake may signal a lack of confidence in the tech giant’s growth prospects. However, many on Wall Street urge investors to remain calm and look beyond this news.
The Warren Buffett-led conglomerate’s decision to sell nearly half of its Apple holdings occurred during a bullish period in the stock market, which saw Apple shares rise by 23% and the S&P 500 hit new records. Despite this, Berkshire Hathaway’s cash pile reached an unprecedented $276.9 billion in the second quarter. This cautious approach suggests that Buffett, 93, one of the world’s most esteemed investors, is growing wary of the broader US economy or possibly sees current sharemarket valuations as too high.
Berkshire’s second-quarter operating earnings rose to $11.6 billion, up from $10 billion in the same period a year ago. The company sold about 390 million Apple shares during the quarter, adding to the 115 million shares sold from January to March, despite Apple’s stock price increase of 23%. As of June 30, Berkshire still owned approximately 400 million Apple stakes, valued at $84.2 billion.
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