Buffett Unloads Apple, Builds Cash Reserves

Key Takeaways:

• Berkshire Hathaway has trimmed 55.8% of its AAPL position.
• Nearly 500 million shares were sold in the first half of 2024.
• Total cash holdings are now up to a record $277B.

Berkshire Hathaway’s Significant Sales and Cash Reserves

In a surprising move, Warren Buffett’s BRK.B (Berkshire Hathaway) sold over 500 million shares of AAPL (Apple) in the first half of 2024. This massive sale represents 55.8% of their position in the tech giant. Despite the significant reduction, Apple remains the largest holding in Berkshire’s portfolio, valued at $85B and making up 28.2% of its total investments.

In addition to Apple, Berkshire also recently sold 90 million shares of BAC (Bank of America), valued at approximately $3.8 billion. With these sales, Berkshire has significantly boosted their cash reserves, which now stand at $277 billion, the highest dollar amount in over two decades and a substantial 65% increase from the previous year.

Possible Motives

• Taxes: Buffett hinted in May that stock sales were a strategic move for tax savings after substantial gains.
• Valuations: When Berkshire first bought Apple in 2016, it traded at 10 times its earnings per share, but that ratio has since tripled.
• Munger Passing: The first significant sales of Apple shares came shortly after Munger’s death, leading to speculation that this event might have prompted Buffett to reassess the portfolio.
• Past Mistakes: Buffett’s experience with KO (Coca-Cola) in the late 1990s, where high valuations led to stagnation, could be informing his current strategy with Apple