Warren Buffett Surprises Apple With Multi-Billion Dollar Investment Slash
Billionaire Warren Buffett has reduced Berkshire Hathaway’s significant stake in Apple, a move that may induce concern in the stock market due to his history of successful investments. Just two years ago, Buffett regarded Apple as one of the cornerstone companies of his conglomerate, likely signaling that he would hold onto the stock long-term, similar to his past investments in Coca-Cola and American Express. However, over the past year, he has sold portions of Berkshire’s Apple holdings as well as shares in Bank of America and Chinese electric vehicle maker BYD, leaving him with nearly $277 billion in cash.
Analysts suggest that Buffett’s actions could unsettle markets, particularly in light of recent disappointing earnings reports and economic uncertainties. Although the exact number of Apple shares remaining wasn’t detailed, it’s estimated that Berkshire still owns around 400 million shares. Critics view Buffett’s selling as a prudent move in portfolio management, given that Apple’s shares had become disproportionately large in Berkshire’s holdings, indicating preparedness for potential economic downturns.
Berkshire’s operational earnings showed growth, in contrast to a decline in net earnings, demonstrating resilience in its core businesses like Geico. while Buffett remains optimistic about Apple and its CEO, Tim Cook, his recent decisions hint at caution amidst a shifting economic landscape.
OMAHA, Neb. (AP) — Billionaire Warren Buffett slashed Berkshire Hathaway’s massive Apple stake in a move that could prove unsettling for the broader stock market — both because the investor is normally so successful and because there had been little positive financial news lately.
Just two years ago Buffett called the stock one of the four giants of his conglomerate’s business alongside Berkshire insurance, utility and BNSF railroad businesses that it owns outright. That gave investors the impression that Buffett might hold onto Apple indefinitely like he has with the Coca-Cola and American Express s he bought decades ago.
However, he has trimmed the Apple stake over the past year and has recently also sold off some of his stock in Bank of America and Chinese EV maker BYD while doing very little buying.
As a result, Buffett is now sitting on nearly $277 billion in cash, up from what was already a record $189 billion just three months earlier.
“This could could alarm the markets especially given the news from last week” with weak tech earnings, a disappointing jobs report and uncertainty about the future of interest rates, Edward Jones analyst Jim Shanahan said.
Buffett has consistently lavished praise on Apple CEO Tim Cook, who attended Berkshire’s annual meeting in Omaha in May, and talked about the way consumers are feverishly devoted to their iPhones and don’t like to switch. He did trim more than 10% of Berkshire’s Apple stake in the first three months of this year when he sold off more than 116 million s, but the sale disclosed Saturday was a much bigger move.
Berkshire didn’t give an exact count of its Apple s in Saturday’s report, but it estimated the investment was worth $84.2 billion at the end of the second quarter even though s soared over the summer as high as $237.23. At the end of the first quarter, Berkshire’s Apple stake was worth $135.4 billion.
Shanahan estimates that Berkshire still holds about 400 million Apple s.
Still, while CFRA Research analyst Cathy Seifert said she looks at the Apple sale more as responsible portfolio management because the tech giant had become such a large portion of Berkshire’s holdings, it does look like Buffett may be preparing for a downturn.
“This is a company girding itself for a weaker economic climate,” Seifert said.
Berkshire reported a small drop in its bottom-line earnings because a drop in the paper value of its investments. The company said it earned $30.348 billion, or $21,122 per Class A , during the second quarter. That’s down from $35.912 billion, or $24,775 per A , a year ago.
Buffett has long cautioned investors that it’s better to look at Berkshire’s operating earnings when judging its performance because those figures exclude investment gains and losses which can vary widely from quarter to quarter.
By that measure, Berkshire’s operating earnings grew more than 15% to $11.598 billion, or $8,072.16 per Class A , from $10.043 billion, or $6,928.40 per Class A , a year ago. Geico led the improvement of Berkshire’s businesses while many of its other companies that are more sensitive to the economy reported lackluster results.
The results easily topped the $6,530.25 earnings per that four analysts surveyed by FactSet Research predicted.
Berkshire owns an assortment of insurance businesses along with BNSF railroad, several major utilities and a varied collection of retail and manufacturing businesses, including brands like Dairy Queen and See’s Candy.
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