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Warren Buffett continues to cut Apple shares as part of a selloff that has seen his Berkshire Hathaway sell $166 billion worth of stock over the past two years, leaving Omaha’s Oracle Corp. among the other companies chasing in the U.S. stock market. I haven’t found many opportunities.
The sprawling industrial and investment conglomerate said on Saturday it had reduced its stake in Apple to $69.9 billion in the third quarter, marking an additional 100 million shares cut over the three-month period.
In just over a year, Buffett has shed nearly two-thirds of his stake in technology companies, which at its peak in 2023 accounted for $178 billion in his stock portfolio.
This stock sale is a dramatic move for Buffett, given that in 2022 Buffett described Apple as one of Berkshire’s “four giants,” accounting for the majority of the company’s value. What a change. At the company’s shareholder meeting in May, he called the iPhone maker “a better company” than Coca-Cola and American Express, two of Berkshire’s longtime holdings.
“Unless something dramatic happens that really changes our capital allocation strategy, Apple will be our top investment,” Buffett told shareholders at the time.
“However, we are not concerned at all about building a cash position under the current circumstances,” he added. “If you look at the alternatives to what’s available in the stock market and look at the picture of what’s going on in the world, you find it very attractive.”
Buffett believes the U.S. federal government is likely to raise tax rates in the coming years, given the country’s continuing budget deficit, which would reduce Berkshire’s profits from future stock sales. said.
Berkshire reported on Saturday that it generated a $97 billion gain on the $133 billion in shares it sold this year, giving the group a profit of $76.5 billion after tax.
“This remains the biggest deal in history by the biggest investor in history,” said Christopher Rosbach, chief investment officer of J. Stern & Co., a longtime Berkshire shareholder.
“His investment in Apple has defined his past decade, and the fact that he’s now selling Apple on valuation grounds means he’s selling his company on a scale that no one has ever seen before. This is proof that we stick to our principles.”
The billionaire investor continues to sell more than just Apple. In the three months that ended in September, Berkshire sold $36.1 billion in stock, including part of its large position in Bank of America. In October, he reduced his stake in Bank of America to less than 10% after selling $10.5 billion worth of shares in the U.S. financial institution, investments dating back to the global financial crisis.
He found little else attractive in the U.S. stock market and bought just $1.5 billion worth of stocks. The 94-year-old has been unloading stocks at an alarming rate, with Berkshire a net seller for eight straight quarters.
Even Berkshire stock was off-limits to the big-name investors who control the company’s stock buyback program. Berkshire did not buy back its own shares in the third quarter.
Buffett, in turn, poured the proceeds from those sales into Treasury bills, pushing the company’s cash position to a record $325.2 billion.
The sale raises questions about Buffett’s motives and investment outlook, as the investor has amassed a huge cash pile unprecedented in the investing world.
He has been content with relatively high yields on Treasury bills, even as the Federal Reserve has begun lowering interest rates. The company earned nearly $10 billion in interest on cash and Treasury positions over the past 12 months, including $3.5 billion in the third quarter.
He has previously built up the company’s cash position and said the pile of liquidity gives Berkshire the ability to jump into a crisis. But the company has faced far better capitalized competitors in the years since the financial crisis. Investment heavyweights like Apollo and Blackstone often step in to lend to companies looking to shore up their balance sheets.
That will be a challenge for Greg Abel, Buffett’s likely successor. The 62-year-old energy executive will be given responsibilities, including overseeing Berkshire’s $271.7 billion stock portfolio, when Buffett ultimately steps down.
The stock sale was disclosed as part of Berkshire’s quarterly results, which showed a decrease in operating income. The company’s insurance business has been hurt by two hurricanes that hit the southeastern United States.
Berkshire expects third-quarter losses from Hurricane Helen to be $565 million, and fourth-quarter losses from Hurricane Milton, which hit Florida a few days later, to be between $1.3 billion and $1.5 billion. He said that
The insurance business also agreed to pay $535 million to resolve asbestos-related talcum powder debt, and the reinsurance division was in the red in the quarter.
Overall operating income was $10.1 billion, down 6% from the same period last year. For years, Buffett has guided investors toward performance that doesn’t include changes in the value of his huge stock portfolio. He warned that the reported net profit was meaningless given stock market fluctuations. Net income for the quarter rose to $26.3 billion from a loss of $12.8 billion in the year-ago period.
Berkshire’s Class A shares have risen 25% this year, outpacing the S&P 500’s total return.
