As We Predicted Warren Buffett Slashes Holdings In Apple Shares

05/05/2024

If any investor has stood the test of time, it’s Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock star-like presence in the investing world, and his annual Berkshire Hathaway shareholders meeting, which was held this weekend, draws thousands of loyal investors.

Warren Buffett remains one of the world’s most prominent investors, renowned for his unique long buy-and-hold strategies and extensive public and private portfolio. Seasoned investors and Buffett enthusiasts are well-acquainted with his famous quote, “His favorite holding for an S&P 500 stock is forever.”

Well, it appears that will not be the case with his largest holding, Apple Inc. (NASDAQ: AAPL). Doug McIntyre and I predicted recently on a 24/7 Wall St. podcast that he would likely start selling stock as China business has stalled, iPhone sales have dropped, and Apple is perceived as having little, if any, Artificial Intelligence exposure. We also noted that the shares could crater if he tried to move too much at once.

Why are we covering this?

Warren Edward Buffett currently serves as the co-founder, chairman and CEO of Berkshire Hathaway.

We have spent almost 15 years at 24/7 Wall St. covering Warren Buffett and his Berkshire Hathaway Inc. (NYSE: BRKA) portfolio. We felt it would be a very good idea to inform our readers, if they owned either Berkshire Hathaway or Apple, about the massive change in holdings in the legacy tech giant.

Here’s how much Apple Warren Buffett owned

It’s almost hard to comprehend that the legacy technology giant, with 905,560,000 shares, at one point made up 45% of the Berkshire Hataway portfolio and held nearly 6% of Apple’s stock even after selling 10 million shares in the fourth quarter of 2023.

How much Apple Does Berkshire Hathaway still own?

Apple is still Berkshire’s Hathways largest holding,

Based on published reports and some changes in the price of Apple stock, Mr. Buffett sold about 115 million shares of the stock, which translated to approximately 13% of its holdings in the company. That would still leave the remaining position to be a staggering 790 million shares.

Why would Buffett sell the stock now?

Warren Buffett says the Apple stock was sold for tax reasons.

Many investors and Wall Street analysts have stated publicly that the position was way too big for Berkshire Hathaway, and the concentration put the rest of the fund and its investors at risk. Warren Buffett, for years, avoided technology stocks claiming he didn’t understand many of them, so the massive position, like the sale, was a surprise to many.

Didn’t Apple report strong quarterly results?

Apple posted quarterly revenue of $90.8 billion, down 4 percent year over year, and quarterly earnings per diluted share of $1.53.

Apple posted second quarter results that beat lowered estimates, but the disclosure that iPhone sales had tumbled 10% and overall revenue was down 4% didn’t sit well with many. In addition the company announced a massive $110 billion share buyback plan, which is the largest in the company’s history. One could surmise that it is very possible that Warren Buffett could negotiate an off-the-floor trade or cross with the company to liquidate even more stock without hammering the stock price.

What happens next for Warren Buffett and Apple?

iPhone

Berkshire Hathaway is still Apple’s single largest shareholder.

With the big position at the start of the year, and Apple stock trading down the entire first quarter it’s clear that Berkshire Hathaway was selling stock into any strength, and while the value of the position declined 22% from the end of 2023 while Apple was only down 11%, the company still printed a massive $11.2 billion after tax gain, much of that from the gains in Apple stock.

Berkshire Hathaway is flush with cash

After the sales in Apple and other holdings the cash position at Berkshire Hathaway has swollen to a remarkable $180 billion and could be as high as $200 billion by the end of the second quarter. At that level it would be almost seven times the minimum $30 billion cash position Mr. Buffett has said he would always maintain. You can bet the lions shares of the cash will go into 6 month and one year Treasury debt that yield 5.37% and 5.13% respectively.