Warren Buffett surprises by slashing Berkshire Hathaway’s longtime Apple stake in 2nd quarter

Billionaire Warren Buffett has significantly reduced Berkshire Hathaway’s substantial stake in Apple, which may cause concern for the overall stock market. This move is noteworthy both because of Buffett’s esteemed reputation as an investor and due to the recent lack of positive financial news. Just two years ago, Buffett had hailed Apple as one of the four giants of his conglomerate’s business, along with Berkshire’s insurance, utility, and BNSF railroad businesses.

This had led investors to believe that Buffett might hold onto Apple indefinitely, similar to how he has held onto shares of Coca-Cola and American Express for decades. However, over the past year, Buffett has reduced Berkshire’s Apple stake and has also sold off some of the company’s stock in Bank of America and Chinese EV maker BYD, while making very few new purchases.

As a result of these moves, Buffett now has nearly USD 277 billion in cash, up from what was already a record USD 189 billion just three months earlier. This development could potentially unsettle the markets, especially in light of last week’s weak tech earnings, a disappointing jobs report, and uncertainty about future interest rates, according to Edward Jones analyst Jim Shanahan.

Buffett had previously praised Apple CEO Tim Cook and the fervent consumer loyalty to iPhones. Nevertheless, he reduced Berkshire’s Apple stake by more than 10 per cent in the first three months of this year, selling off over 116 million shares. The sale disclosed on Saturday was a much larger move. Despite this, Apple remains the largest investment in Berkshire’s portfolio by far, exceeding its Bank of America stake by more than double.

While Wedbush tech analyst Dan Ives does not see this as a negative signal, CFRA Research analyst Cathy Seifert views Berkshire’s reduction in Apple shares as a move toward responsible portfolio management due to the tech giant’s sizable portion of Berkshire’s holdings. Berkshire’s reported a small drop in its bottom-line earnings in the second quarter, mainly due to a decrease in the paper value of its investments.

The company’s operating earnings, which exclude investment gains and losses, saw more than a 15% increase. Overall, Berkshire Hathaway’s businesses, including its assortment of insurance, railroad, utilities, and retail and manufacturing businesses, reported mixed results.

Geico led the improvement of Berkshire’s businesses, while many other companies, particularly those sensitive to the economy, reported lackluster results. Please let me know if you need anything else.