Jamie Spencer
Warren Buffett’s Berkshire Hathaway, long one of Apple’s largest shareholders, has been quietly reducing its stake in the tech giant throughout 2024. At the start of the year, Berkshire owned 907.6 million Apple shares, valued at $174.3 billion, representing 5.7% of Apple’s total shares outstanding. However, as of September 30, Berkshire had trimmed its holdings by two-thirds, leaving the company with around 296 million shares, valued at $69 billion.
The strategic sale of Apple shares raises questions about why Buffett would reduce his stake in such a lucrative investment, especially given Apple’s 15.8% gain this year and its status as the world’s most valuable company, with a market capitalization of $3.37 trillion.
Strategic Stock Sales Amid Rising Apple Prices
Berkshire Hathaway’s third-quarter earnings report, released on Saturday, revealed the reduced Apple stake, despite Apple’s continued stock price growth. The stock rose from $192.53 at the end of 2023 to $233 by the end of the third quarter, meaning Buffett’s strategic selling did not negatively affect Apple’s price performance. In fact, Apple is up 15.8% for the year, signaling that both Berkshire and other Apple shareholders have benefited.
Buffett’s approach to selling stock has always been meticulous. Though Berkshire’s financial reports do not disclose every individual trade, the steady sale of Apple shares has been executed so carefully that it has not caused any significant price dips, a testament to Berkshire’s disciplined investment strategy.
Tax Considerations and Capital Gains
At Berkshire Hathaway’s annual meeting in May, Buffett pointed to tax considerations as a factor in the decision to sell Apple shares. Berkshire’s cost basis for the Apple stake is around $19.1 billion, meaning the company is sitting on a massive capital gain after years of holding the stock. Given the scale of Berkshire’s profits from Apple, selling a portion of the stake allows Berkshire to manage its tax liabilities strategically.
With Apple’s shares hitting high valuations, Buffett has suggested that the stock may be getting too expensive. Even though Apple remains a strong performer, Buffett’s long-standing investment philosophy emphasizes value. As his close friend and longtime advisor, the late Charlie Munger, famously said, it’s about buying “great companies at a great price.”
Why Buffett Is Trimming His Apple Stake
One key reason for the Apple stock sale is simple: Warren Buffett doesn’t believe in paying too much for any stock, no matter how strong the company. While Apple is a standout performer with a 15.8% gain this year, Buffett and his team likely felt that Apple’s current price, despite its market dominance, may not represent the best value for new investment. This cautious approach aligns with Buffett’s broader strategy of balancing risk with reward.
At the same time, Berkshire’s cash hoard has swelled to more than $320 billion, which is now a third of the company’s total net worth. This massive cash reserve gives Berkshire significant flexibility. The proceeds from the sale of Apple shares, combined with other stock sales, provide Buffett and his team with ample capital to pursue other investment opportunities or even buy back Berkshire’s own stock.
Apple Still a Key Holding for Berkshire
Despite reducing its stake, Apple remains one of Berkshire Hathaway’s largest investments. While the firm has sold two-thirds of its Apple shares, it still holds a significant portion, underscoring Buffett’s belief in Apple as a “great company.” However, as a disciplined value investor, Buffett has chosen to rebalance the portfolio in line with his long-term strategy of maintaining diversified holdings while maximizing shareholder value.
In the broader context, this move reflects Buffett’s timeless investment philosophy: never overpay, and always look for opportunities to redeploy capital where it can generate the best returns. With Apple stock continuing to soar, Berkshire’s decision to sell at such high prices shows the precision and foresight that have defined Buffett’s legendary career.
