Warren Buffett’s Berkshire Hathaway Inc. made headlines recently with its significant reduction in holdings of Apple Inc., a move that captured the attention of investors and market analysts alike. According to a recent SEC 10-Q filing, Berkshire slashed its stake in Apple by 22%, from $174.3 billion to $135.4 billion. This decision to trim its holdings came despite only an 11% drop in Apple’s share price during the same period, signaling a strategic adjustment in Berkshire’s investment portfolio.
The reduction in Berkshire’s Apple holdings marked the second consecutive quarter in which the Omaha-based conglomerate trimmed its stake in the tech giant. This move was part of a broader cautious approach by Berkshire amid evolving market dynamics, reflecting Buffett’s disciplined investment strategy. Notably, Apple’s shares experienced a decline of 4.63% year-to-date, contributing to Berkshire’s decision to rebalance its portfolio.
Despite the reductions, Buffett reassured investors at Berkshire’s annual meeting that Apple would likely remain the company’s largest investment unless significant capital allocation changes occur. The proceeds from the sale of Apple stock significantly bolstered Berkshire Hathaway’s cash reserves, expected to exceed $200 billion by June. This substantial cash position positions Buffett favorably for potential market downturns and strategic investment opportunities.
Apple responded to market concerns by announcing a massive $110 billion share repurchase program, the largest ever in the U.S. stock market. This strategic move aimed to instill confidence in investors and support Apple’s stock price. The announcement led to a 6% rally in Apple’s stock last Friday, marking its best performance since November 2022.
From a technical perspective, Apple showed signs of a potential market turnaround. The stock surpassed its 200-day moving average and cleared the 50% Fibonacci retracement mark from its December 2023 highs to April 2024 lows. These technical indicators suggested a possible reversal of the recent bearish trend, attracting investor attention and contributing to the stock’s positive momentum.
Despite the substantial sell-off by one of its most steadfast investors, Apple remains a crucial component of Berkshire’s portfolio. The broader market’s response to Berkshire’s actions indicates resilience in Apple’s stock, reflecting confidence in the company’s long-term growth prospects and ability to navigate market challenges. As Buffett continues to steer Berkshire through changing market conditions, investors will closely monitor his investment decisions and their implications for Apple and the broader market.