OMAHA, Neb. – Warren Buffett’s Berkshire Hathaway has slashed its giant Apple bet in the first quarter as the Oracle of Omaha continued to reduce the size of his favorite bet.
In its first-quarter earnings report released Saturday, Berkshire Hathaway said its bet on Apple totaled $135.4 billion, which implies about 790 million shares. This would represent a share reduction of approximately 13%. At the end of the quarter, Apple was still Berkshire’s largest holding.
Warren Buffett walks on stage before Berkshire Hathaway’s annual shareholder meeting in Omaha, Nebraska, May 3, 2024.
David A. Grogen | CNBC
This is the second quarter in a row that the Omaha-based conglomerate has cut its stake in the iPhone maker. In the fourth quarter, she sold about 10 million shares of Apple (just 1% of her huge stake). When Apple’s share price movement is taken into account, the announcement would mean Berkshire sold about 116 million shares.
Buffett, answering questions from shareholders at Berkshire’s annual meeting in Omaha, suggested the sale was for tax reasons after significant gains. He also suggested that the sale could be linked to his desire to avoid future tax increases if rates were raised to finance the ballooning US budget deficit.
“It doesn’t bother me one bit about writing this check, and I really hope that despite all that America has done for all of you, it shouldn’t bother you that we’re doing this, and if I write it at 21%, that’s next year, and we’ll do it at a slightly higher percentage later, I don’t think you’ll really mind the fact that we sold some Apple this year,” Buffett said at the meeting.
Buffett became a big Apple fan after one of his investment managers, Ted Weschler or Todd Combs, convinced him to buy the stock years ago. Buffett even named the tech giant as his second-largest business behind Berkshire’s insurance group.
Apple
Many speculate that the 93-year-old investor cut his favorite stake due to valuation issues. Apple shares are up as much as 48% in 2023 as mega-cap tech stocks led the market rally. At its peak, Apple dramatically increased Berkshire’s stock portfolio, taking up 50% of its holdings. The stock trades at more than 27 times forward earnings.
Shares of the iPhone maker rose significantly last week after the company announced that its board of directors had authorized a $110 billion share buyback, the largest in the company’s history. However, Apple reported a decline in overall and iPhone sales. The stock has fallen more than 4% this year amid concerns about how it will revive growth.
It’s not unprecedented for a Berkshire CEO to adjust Apple’s bet. He sold some shares in the fourth quarter of 2020, but Buffett admitted at the time that it was “probably a mistake.” It’s also not common for Buffett to trim a position that has gotten so large.
Even after the sale, Berkshire is still Apple’s largest shareholder outside of exchange-traded fund providers.