Warren Buffett’s Berkshire Hathaway further lightens stake in Apple
US billionaire and renowned investor Warren Buffett’s Berkshire Hathaway has shed another 49% of its stake in technology giant Apple Inc.
The sale of 390 million shares, carried out in the second quarter of 2024, comes on top of the 115 million shares the company sold between January and March and represents a total 55.8% reduction in Berkshire’s Apple holdings since the beginning of the year.
As at June 30, Berkshire still owned 400 million Apple shares valued at an estimated $129.5 billion.
Gradual reduction
The move has sent shockwaves through the financial community, with many wondering what messages it sends about the world’s current economic outlook.
Some analysts said the move had been unsettling for the broader stock market because Mr Buffett is so revered and because it happened on the back of limited positive financial news.
Others suggest it shows a lack of confidence in share markets by the world’s most-followed investor.
“This is a company girding itself for a weaker economic climate—Mr Buffett may be preparing for a downturn,” one analyst said.
“Apple’s tepid growth rate and high valuation suggest the famed investor may have concluded the stock’s prospects are not great,” said another.
Largest investment
Mr Buffett has assured markets that Apple would remain Berkshire’s largest stock investment but said selling made sense because the 21% US federal tax rate on capital gains was likely to grow.
“Unless something really extraordinary happens, we will own Apple and American Express and Coca-Cola when [my successor] takes over this place,” Mr Buffett said.
Although Apple shares have gained 18.4% this year to reach a market capitalisation of $6.77 trillion, nervy investors are expected to follow Berkshire Hathaway out of the stock.
The proceeds saw Berkshire’s cash float surge to a record $425b by end June, up from the previous all-time high of $290b at end March.
Top five holdings
Berkshire reports show that its American Express stake was worth approximately $53b last quarter, while its Coca-Cola stake was worth nearly $38b.
Chevron and Bank of America are also in the firm’s top five holdings, valued at $29.84b and $60.3b respectively.
Mr Buffett has led Berkshire since 1965, building it into a conglomerate of businesses including Geico Car Insurance, the BNSF Railway, Berkshire Hathaway Energy and Dairy Queen.