Warren Buffett, the billionaire investor, has left the stock market bewildered by dramatically slashing Berkshire Hathaway’s hefty Apple investment. Two years ago, Buffett referred to Apple as one of the four key pillars of Berkshire Hathaway, alongside its utility, insurance, and BNSF railroad businesses. This led many investors to believe he would hold onto Apple shares long-term, similar to his approach with Coca-Cola and American Express.
However, Buffett has been decreasing his Apple holdings over the past year. He has also divested his shares in Bank of America and the Chinese electric vehicle maker BYD, while largely refraining from making new investments. Consequently, Buffett now has nearly $277 billion in cash, a significant increase from the previous record of $189 billion just three months ago. This large cash reserve could alarm investors, especially following recent negative news including weak technology earnings, a disappointing jobs report, and uncertainty about future interest rates, according to Edward Jones analyst Jim Shanahan.
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Buffett has praised Apple CEO Tim Cook and highlighted the strong loyalty of iPhone users. Despite this, he reduced Berkshire’s Apple stake by over 10% in the first three months of the year, selling more than 116 million shares. The latest sale, revealed on Saturday, was a much larger reduction. While Berkshire Hathaway did not provide an exact number of its remaining Apple shares, it valued its Apple investment at $84.2 billion at the end of June. This is down from $135.4 billion at the end of March, even though Apple’s stock price had risen to $237.23 over the summer. Analysts estimate that Berkshire still holds about 400 million Apple shares.
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CFRA Research analyst Cathy Seifert views the reduction in Apple shares as prudent portfolio management, given that Apple had become a very large part of Berkshire’s investments. She suggested that Buffett might be preparing for a potential economic downturn. Berkshire Hathaway also reported a slight decrease in overall earnings due to the reduced value of its investments, with a second-quarter profit of $30.348 billion, down from $35.912 billion a year earlier. However, Berkshire’s operating earnings, which exclude fluctuating investment gains and losses, increased by over 15% to $11.598 billion.
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For those unaware, Berkshire Hathaway owns a diverse range of businesses, including insurance companies, BNSF railroad, utilities, and well-known brands like Dairy Queen and See’s Candy.
(With Reuters Inputs) Come from Sports betting site VPbet
