Berkshire Trims Apple Stake by 13%, Cites Tax Strategy

Key Takeaway

• Berkshire Hathaway cuts its Apple stake by 13% to 790 million shares, citing tax considerations amid a broader stock portfolio adjustment.
• Despite the sale, Apple remains Berkshire's largest investment; the tech giant's stock rose 48% in 2023 but faces growth concerns.
• Berkshire's cash reserves hit a record $189 billion in Q1 2024, reflecting challenges in finding attractive investment opportunities.

Berkshire Adjusts Apple Stake

Warren Buffett's Berkshire Hathaway has reduced its stake in Apple, marking a significant move for the conglomerate which has held Apple as its largest investment. In the first quarter of 2024, Berkshire Hathaway's stake in Apple was valued at $135.4 billion, indicating a reduction of approximately 13% to around 790 million shares. This adjustment follows a previous sale of about 10 million Apple shares in the fourth quarter, suggesting a continued strategy of downsizing its position in the tech giant. Despite this reduction, Apple remains Berkshire Hathaway's most substantial holding.

Warren Buffett, addressing shareholder queries at the annual meeting in Omaha, attributed the sale partly to tax considerations, following substantial gains in the investment. He expressed a pragmatic view on tax obligations, emphasizing the importance of contributing to national finances and hinting at potential future tax rate increases. Buffett's investment in Apple, initially influenced by investment managers Ted Weschler or Todd Combs, has been a notable aspect of Berkshire's strategy, with Buffett previously lauding Apple as a crucial business after Berkshire's insurance operations.

Apple's Market Performance

Apple's stock has experienced significant fluctuations, with a 48% increase in 2023, driven by a broader rally in megacap tech shares. However, concerns have emerged regarding Apple's growth trajectory, as evidenced by a recent decline in overall sales and iPhone sales specifically. Despite these challenges, Apple announced a record $110 billion share repurchase authorization, underscoring its financial strength and commitment to shareholder returns. The company's forward earnings valuation and its position in Berkshire's portfolio, even after the sale, reflect its ongoing importance to Buffett's investment strategy.

Berkshire's Financial Landscape

Berkshire Hathaway's financial maneuvers extend beyond the adjustment in its Apple stake. The conglomerate's cash reserves reached a record $189 billion in the first quarter of 2024, highlighting the challenges Buffett and his team face in identifying compelling investment opportunities. The period saw Berkshire selling nearly $20 billion worth of stocks while purchasing $2.7 billion, leading to a decrease in the overall value of its stock portfolio. This activity coincides with Berkshire's annual shareholder meeting, where Buffett's investment decisions and outlook are closely scrutinized.

Management Quotes

• Warren Buffett, CEO of Berkshire Hathaway:

  "It doesn’t bother me in the least to write that check and I would really hope with all that America’s done for all of you, it shouldn’t bother you that we do it and if I’m doing it at 21% this year and we’re doing it a little higher percentage later on, I don’t think you’ll actually mind the fact that we sold a little Apple this year."