Anamika Dey, editor
Brief news
- Warren Buffett has reduced Berkshire Hathaway’s Apple holdings for four consecutive quarters, selling about 25% of his stake, which has decreased by 67.2% year-over-year.
- Analysts speculate the sales may be for tax purposes or portfolio management strategies.
- Berkshire’s cash reserves reached a record $325.2 billion, with no buybacks during the quarter.
Detailed news
The largest stock position that Berkshire Hathaway has ever had was reduced for the fourth consecutive quarter as a result of Warren Buffett selling another significant portion of his Apple holdings.
According to the financial report for the third quarter that was announced on Saturday morning, the conglomerate that is located in Omaha had Apple shares worth $69.9 billion at the end of September. With around 300 million shares still in the holding, this indicated that Buffett had sold off approximately a quarter of his ownership in the company. The stake has decreased by 67.2% since the conclusion of the third quarter of the previous year.
In the fourth quarter of 2023, the Oracle of Omaha began reducing his investment in the iPhone manufacturer. He then increased his selling activity in the second quarter, when he unexpectedly dumped about half of the bet.
The precise reason for the continuous selling of the stock that Berkshire first acquired over eight years ago remains obscure. Analysts and shareholders had hypothesized that the reason for this was the high valuations and the implementation of portfolio management strategies to mitigate concentration. Berkshire’s Apple holding was once so substantial that it comprised half of its equity portfolio.
At the annual meeting of Berkshire in May, Buffett made a veiled reference to the fact that the sale was done for tax purposes. He hypothesized that the tax on capital gains would be increased in the future by a government in the United States that is attempting to reduce a growing deficit in the country’s budget. On the other hand, the scale of the sales led many people to suspect that it may be more than just a move to save money on taxes.
In 2016, Berkshire initiated the acquisition of the stock under the guidance of Ted Weschler and Todd Combs, Buffett’s investment advisers. Buffett primarily avoided technology companies for the majority of his tenure prior to Apple, claiming that they were beyond his area of expertise.
Apple’s devoted client base and the irresistible nature of the iPhone were the primary reasons that the famed investor fell in love with the company. Over the course of his career, he has grown his Apple investment to become the most valuable in Berkshire. At one point, he even referred to the computer giant as the second-most significant firm behind his group of insurance companies.
Berkshire’s cash hoard hit an all-time high of $325.2 billion in the third quarter, reflecting the massive selling frenzy that the company engaged in during that period. Buybacks were totally halted by the company throughout the quarter.
Since the beginning of the year, Apple shares have increased by 16%, which is lower than the S&P 500’s rise of 20%.
Source : CNBC News
