Berkshire Hathaway, the conglomerate led by Warren Buffett, released its third-quarter earnings report on November 2, 2024, revealing significant changes in its investment portfolio. A key highlight was the continued reduction of its substantial Apple holdings.
Apple Stake Reduction
Warren Buffett has been steadily decreasing Berkshire’s stake in Apple, the conglomerate’s largest equity holding. As of the end of September, the company held $69.9 billion worth of Apple shares, indicating a reduction of approximately 67.2% from the previous year. This marks the fourth consecutive quarter of selling, with about 300 million shares remaining.
The ongoing sell-off, which began in the fourth quarter of 2023, has sparked speculation among analysts and shareholders. While some attribute the move to high valuations and a need to manage portfolio concentration, others believe tax considerations may be a factor. At the Berkshire annual meeting in May, Buffett suggested that potential future capital gains tax increases might be influencing his decision.
Historical Context
Berkshire Hathaway’s relationship with Apple dates back to 2016, when Buffett’s investment managers, Ted Weschler and Todd Combs, first purchased shares. Despite Buffett’s historical avoidance of tech companies, he was drawn to Apple’s loyal customer base and the enduring appeal of the iPhone. Over the years, Apple became Berkshire’s largest equity holding, even described by Buffett as the second-most important business after its insurance operations.
Financial Position and Market Performance
Amid these changes, Berkshire’s cash reserves have soared to an unprecedented $325.2 billion. Notably, the firm paused its share buybacks during the quarter. Meanwhile, Apple shares have risen 16% this year, although they still lag behind the S&P 500’s 20% gain.
Berkshire Hathaway’s strategic adjustments reflect both market conditions and Buffett’s long-term investment philosophy. As the company navigates these shifts, investors continue to watch closely for insights into Buffett’s future moves.
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