Warren Buffett has reduced Berkshire Hathaway’s large investment in Apple, a surprising move that could worry the stock market. Buffett had previously praised Apple as one of the key companies in Berkshire’s portfolio, alongside its insurance, utility, and railroad businesses. This led many to believe he would keep the Apple shares long-term, similar to his investments in Coca-Cola and American Express.
Recently, Buffett has also sold some of his shares in Bank of America and the Chinese electric vehicle company BYD. Despite this, Berkshire Hathaway now holds nearly $277 billion in cash, a significant increase from $189 billion three months ago.
Analyst Jim Shanahan from Edward Jones noted that this news could unsettle the markets, especially following recent weak tech earnings, a poor jobs report, and uncertainty about interest rates.
Buffett has praised Apple CEO Tim Cook and noted the strong consumer loyalty to iPhones. However, Buffett sold more than 116 million Apple shares in the first quarter of this year and made a larger sale recently. Although Berkshire Hathaway did not disclose the exact number of Apple shares held, it estimated the stake was worth $84.2 billion at the end of the second quarter, down from $135.4 billion at the end of the first quarter.
Analyst Cathy Seifert views the Apple sale as prudent portfolio management, given Apple’s large share of Berkshire’s holdings. She suggests that Buffett might be preparing for a potential economic downturn.
Berkshire Hathaway reported a slight drop in earnings due to lower investment values, earning $30.348 billion, or $21,122 per Class A share, in the second quarter, compared to $35.912 billion, or $24,775 per A share, a year earlier. However, its operating earnings, which exclude investment gains and losses, rose by over 15% to $11.598 billion, or $8,072.16 per Class A share.
The company owns a range of businesses, including insurance, utilities, BNSF railroad, and brands like Dairy Queen and See’s Candy.