In the third quarter, Warren Buffett, through Berkshire Hathaway, continued to trim his significant investment in Apple, marking the fourth consecutive quarter of sales from the conglomerate’s largest equity holding.
According to Berkshire’s earnings report released Saturday, the Omaha-based company now holds approximately $69.9 billion in Apple shares as of the end of September, reflecting a decrease of about 25% in its Apple holdings since the previous quarter. With roughly 300 million Apple shares remaining, Berkshire’s stake in the tech giant has dropped 67.2% from its peak at the end of last year’s third quarter.
Buffett’s selloff of Apple began in the fourth quarter of 2023, with a noticeable ramp-up in sales occurring by the second quarter of this year, when he sold nearly half of Berkshire’s position in Apple. While Buffett has not explicitly stated the reason behind this significant reduction, some analysts speculate the decision may be influenced by high valuations and a desire to manage portfolio concentration. Apple’s prominence in Berkshire’s portfolio was considerable, at one point accounting for half of its equity holdings.
At Berkshire’s annual meeting in May, Buffett suggested tax considerations might be behind the move, noting that potential future increases in capital gains taxes could have influenced his decision to sell while current rates remained favorable. However, given the scale of the selloff, many industry watchers believe other strategic factors may also be at play.
Berkshire originally began investing in Apple in 2016 under the guidance of Buffett’s investment managers, Ted Weschler and Todd Combs. This investment marked a notable shift for Buffett, who had traditionally avoided technology stocks, citing them as outside his “circle of competence.” However, Apple’s strong brand loyalty and the recurring revenue generated by iPhone sales attracted Buffett’s interest, leading him to expand the holding to become Berkshire’s largest single equity position. Buffett once even referred to Apple as Berkshire’s “second-most important business,” following only its core insurance holdings.
Amid the selling, Berkshire’s cash reserves reached a record $325.2 billion by the close of the third quarter, reflecting Buffett’s conservative stance in the current investment climate and a reluctance to pursue major acquisitions. Interestingly, the company also halted its stock buybacks this quarter. This cash buildup provides significant flexibility for future investments but suggests Berkshire is exercising caution amid current market valuations.
Apple’s stock, while still up 16% for the year, lags behind the broader S&P 500’s 20% increase. As Buffett’s sales progressed, Berkshire’s operating earnings for the third quarter showed a 6% year-over-year decline, totaling $10.09 billion due to a decline in insurance underwriting earnings.
