Berkshire Hathaway (NYSE: BRK.B), led by billionaire Warren Buffett, has slashed its stake in Apple Inc. (Nasdaq: AAPL) by approximately 50% during a big second-quarter divestment.
The company sold $75.5 billion worth of stock on a net basis, resulting in a record cash reserve of $276.9 billion. This move comes as a surprise to many, given Apple’s status as a top holding in Berkshire’s portfolio.
The timing of the selloff coincides with the S&P 500 stock index reaching a record high in mid-July, followed by a three-week decline due to concerns about artificial intelligence hype. Jim Shanahan, an analyst at Edward Jones, suggests this could be interpreted as a “sell signal” from Buffett.
Berkshire has also been reducing its stake in Bank of America Corp. (NYSE: BAC), trimming the position by 8.8% since mid-July. The company has faced challenges in finding suitable investment opportunities amid soaring share prices and stagnant deal activity.
At Berkshire’s annual shareholder meeting in May, Buffett expressed caution about deploying cash unless an opportunity presented very little risk with high potential returns. The company’s stock buybacks, previously used as a means to utilize cash, have also decreased to their lowest level since 2018.
Despite the huge selloff, Apple remains a profitable investment for Berkshire. The company’s remaining shares in Apple were valued at $84.2 billion at the end of June, representing a substantial gain from its initial $31.1 billion investment. Prior to the sales, Buffett praised Apple as an “even better” business than other major holdings like American Express (NYSE: AXP) and Coca-Cola (NYSE: KO).
Some analysts speculate that Berkshire’s stock sales may be aimed at avoiding higher capital gains taxes and that profit-taking could continue in long-term positions.
Information for this story was found via Fortune, Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
